PUTRAJAYA: Nearly 40,000 bankrupt individuals have been granted relief through the Second Chance Policy initiative as of February, says Malaysian Insolvency Department (MdI) director-general M. Bakri Abd Majid.
He said the policy aimed to provide relief to up to 130,000 individuals declared bankrupt within a year of the enforcement of the Insolvency (Amendment) Act 2023 [A1605] which came into effect on Oct 6, 2023.
“This policy offers bankrupt individuals the opportunity to rebuild their lives despite their bankruptcy status. We can see that the government is committed to ensuring no one is left behind in the country’s development.
“We aim to grant relief to 130,000 bankrupt individuals by the end of this year. This figure is 50 per cent of the 260,000 cases currently handled by MdI,“ he told Bernama recently. The Second Chance Policy is a government initiative aimed at safeguarding the interests of individuals with small-scale debts by releasing them from bankruptcy through specific conditions.
Prime Minister Datuk Seri Anwar Ibrahim, when tabling Budget 2024 last year, announced that the second chance policy would be extended to individuals aged 40 and below with debts not exceeding RM200,000 starting this year.
M. Bakri said during meetings held with MdI, applicants of the initiative expressed happiness, as well as the desire to resume business, support their families and contribute to the national economy.
“This indicates that we believe that once released from bankruptcy, they will strive to rebuild their lives anew. The government acknowledges this, which is why the second chance policy was introduced.
“We issue bankruptcy discharge certificates to them and they have shared their plans after being released from bankruptcy,“ he said, adding that MdI is actively conducting the 2024 Insolvency Department Outreach Programme nationwide, especially in rural areas, to provide information about the second chance policy.
“We meet with village heads and provide explanations about the bankruptcy process and the opportunities available for them, to channel the information in their areas,“ he said.
Meanwhile, M. Bakri stressed that the negative stigma surrounding bankruptcy needed to be eradicated as opportunities were still abound for all.
“These bankrupt individuals often lack accurate information even though it’s provided on the website. Not all have access to the information we distribute; sometimes they hear it from third parties.
“Now, we have permitted for every bankrupt individual to open an account because everything is now in cashless form,“ he added, advising bankrupt individuals to contact MdI to get clear information.
Regarding the number of bankruptcy cases, he said there was a decreasing trend, with 233,483 cases last year compared to 269,654 in 2022.
“We’ve noticed that the number of bankruptcy cases is going down. This trend can be attributed to the increase in the minimum bankruptcy threshold from RM50,000 to RM100,000, which came into effect on Sept 1, 2021,“ he said.
M. Bakri said among the main factors leading individuals to be declared bankrupt was due to personal loans, with 13,112 cases recorded from January 2022 until February this year.
“Perhaps the financial literacy among the Malaysian populace is not high. Consequently, the easiest way they solve financial problems is by obtaining personal loans to get quick cash. Don’t dig a hole to cover a hole,“ he said.
He said that an effective measure to prevent individuals from being declared bankrupt was through education and knowledge on how to manage expenses prudently and responsibly.
“As we can see, many among us spend beyond our means. This situation will lead to individuals being severely indebted when they cannot repay their debts to creditors,“ he said.
M. Bakri also advised the younger generation not to be influenced by trends or luxurious lifestyles to the extent of neglecting basic needs.
“Impulsive spending prioritising unnecessary desires will only harm oneself and lead to various social problems among the youth,“ he added.
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