KUALA LUMPUR (August 15): Bankruptcy statistics for January to April 2022 recently revealed are just the tip of the iceberg due to the Insolvency (Amendment) Act 2020 which came into force on September 1 2021, according to the Consumers Association of Penang (CAP).
In a statement released Monday, August 15, the association said that with the amendment, a creditor can file a bankruptcy action against the debtor if the debt amounts to RM100,000.
He said the threshold for bankruptcy was RM50,000 before the amendment, adding that this means that if a debt does not exceed RM100,000, the creditor is now unable to file a bankruptcy action.
The CAP said it is difficult to determine the number of debtors who owe amounts less than RM100,000 unless they go to agencies such as the Credit Counseling and Management Agency. Debt (AKPK), which comes under Bank Negara Malaysia. .
CAP said an average of 18 people of all ages were declared bankrupt daily in the first five months of 2022.
The association said it was difficult to determine the actual number of debtors who are struggling below this RM100,000 bankruptcy threshold, simply waiting for their accrued interest to push them past this threshold.
He said the other apprehension is that around half of those who went bankrupt in 2022 are between the ages of 25 and 44 – when they are in their prime, trying to build a career and needing to rebuild their credit and obtain loans.
CAP said people need to understand that no business or financial institution can possibly forget a debt owed to them, and it will haunt the debtor even years later with additional interest.
“We advise people who are unable to honor a loan due to unforeseen circumstances to try to prioritize the repayment of their loan or seek advice from AKPK for possible solutions.
“The other common issue (complaint) CAP has received is that people are not updating their current mailing address and contact information with the financial institution where they took out their loan,” he said. .
CAP said that if they default on their home loan, for example, the financial institution could send them legal notices that they will never receive until it is too late.
“So we urge people to take their loan issues seriously.
“Above all, they should practice savings and avoid unnecessary spending,” he said.