How much do we have to owe before anyone can go to the court and apply for us to be declared a bankrupt? Here’s an article about it in Comparehero. It says “It is a process where a debtor (a person who owes money to a creditor) is declared bankrupt following a court order known as Adjudication Order from the High Court against him or her. The following criteria applies when declaring a person bankrupt: Unable to pay debts which amount to at least RM30,000. published May 20, 2016″ Many times, we do not suddenly owe so much but as soon as start to fall into the debt trap, it’s very hard to climb out of it. According to the Minister in the Prime Minister’s department Datuk Seri Azalina Othman, the records from the Department of Insolvency for 2013-2016 showed that 82,383 Malaysians were declared bankrupt by the court. Full article in NST here. Out of these Malaysians, 3,276 of them were civil servants.
In fact based on a year by year comparison, the number of civil servants declared bankrupt is rising. In 2015, a total of 960 were declared bankrupt and this rose to 1,093 in 2016. Selangor has the highest number of cases at 22,593. Perlis recorded the lowest with only 354 cases. Some time back, I wrote about the reasons for bankruptcy here: Bankruptcy before property, not after property, perhaps There’s also an article in cilisos which tells us the major reasons for all these bankruptcies. 25 percent of all bankruptcies were due to CAR LOANS. My friend who’s a marketing manager at a continental car brand told me that his bankers always share with him that there are buyers who are still taking car loans even though they are already at the borderline of ‘bankruptcy.’ What are these people trying to do with their lives he wonder.
Following close behind is actually PROPERTY loans at 21.36 percent, personal loans at 20.41 percent and business loans at 11.71 percent. I have a friend who was declared bankrupt many years ago for a business loan. When his business was doing extremely well, he did not really look at how he spent his money. Truth is, no business can sustain our luxurious lifestyle…. Before everyone start to tell everyone to stop buying property, let’s understand that buying the wrong property or buying a property beyond our comfortable affordability level is NOT an investment. It’s just a gamble or wrong decision. Both are fatal, usually. Here’s an article on not falling into the property bankruptcy category. Stay safe, buy within affordability and stop bubble building Hopefully we have learnt that bankruptcy can affect anyone, even those who earns seemingly stable incomes. Happy avoiding it.
written on 8 Feb 2017
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0 Responses
It also shows something!
How did the banks lend these people more than the values of the collaterals? When a person borrows against his property, the lenders normally have a buffer, e.g 20% and above. When a person couldn’t pay up, the lender will force-sale the property.
Bankruptcy as a result of consumption is poor money management. Bankruptcy as a result of business failure deserves to be look upon more kindly. An early discharge is good.
Yea, these days it has become ever stricter. The approval rate is lower than 50 percent. Earlier discharge is a good way to encourage entrepreneurship but I will stay neutral for this. I know of some cases where I think the business owner should not start a business in the first place. Remember, the loans they borrow is also due to savings from us. Cheers.