PETALING JAYA: Proposed amendments to the Bankruptcy Act 1967 will see an automatic discharge after three years for anyone declared a bankrupt, TheSun reported today.
This is one of the major changes that could significantly reduce the burden on debtors declared bankrupt due to their own borrowings, and that of guarantors for loans taken by others.
Previously, a debtor would have to wait five years before being able to even apply for a discharge in court.
Minister in the Prime Minister’s Department Azalina Othman Said told the daily that the draft bill for the proposed amendments to the act will first be presented to the Cabinet at its weekly meeting next week.
“Upon filing the statement of affairs, a person declared bankrupt can be discharged after three years so that they can start a new life.
“It will not bring any benefit to make them wait for five years. The person may not be able to pay the debts even after five years. Most of the time bankrupts will not have anything to pay.
“So after they are discharged, any creditors who want to give financial assistance will be more cautious,” Azalina was quoted as saying by TheSun.
She added that Singapore has a similar policy, mainly to save on public funds borne by the Insolvency Department for the whole process of discharging a debtor.
Another major provision in the draft amendment bill is to increase the maximum threshold before a debtor can be declared bankrupt, from the current RM30,000 to RM50,000.
“Currently the threshold is RM30,000. If a person’s debts exceed RM30,000, they would be declared bankrupt but the government wants to propose to increase the threshold to RM50,000.
“This will give protection to the people and the proposal is more debtor-centric,” Azalina said, according to TheSun.
Putrajaya reportedly wants more protection for debtors who have been declared bankrupt, especially guarantors who are in the predicament due to banks and other financial institutions coming after them over the non-payment of loans taken by the original borrower.
Last December, Minister in the Prime Minister’s Department Nancy Shukri told the Dewan Negara that between 2010 and October last year, 11,159 individuals were declared bankrupt, 60.8 per cent of whom were social guarantors.