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❗18 people declare bankruptcy each day 💸

In the first 5 months of 2022, the Malaysian Insolvency Department (MDI) reported that 18 people were declared bankrupt on a daily basis. As of May 2, 2022, the total number of bankruptcies was at a staggering 274,628 people.


Close to 60% of those declared bankrupt from 2018 to May 2022 were aged between 25 and 44 years old. Alarmingly, more than 200 were aged 25 or younger.


Reasons for bankruptcy include personal loans, vehicle hire purchases, business loans and outstanding credit card payments.

Source: Malaysian Department of Insolvency

However, the number of bankruptcies in Malaysia has observed a steady downward trend as cases have reduced from 16,000 in 2018 to 6,500 in 2021. The MDI attributes the significant reduction to the amendment of the Insolvency Act that increased the bankruptcy threshold from RM50,000 to RM100,000 in September 2020.


More than half of those who were declared bankrupt owed sums ranging from RM100,000 to RM499,999. Nearly 8% fall in the RM500,000 to RM999,999 bracket, whilst another 5% have debts of more than a million.


Prof Dr Mohamad Fazli Sabri commented that 18 people declared bankrupt every day was alarming even though the data may be far lower than in previous years.

"If we multiply 18 by 365 days, we will have close to 6,600 cases a year. Although the numbers might be lower than the previous year, we need to remember that the threshold for bankruptcies was RM30,000 before it was increased to RM50,000, and now RM100,000,”

Fazli also advised the public to seek help from professionals prior to making any new loan commitments.

“The fact that many of them fall into bankruptcy due to personal loans is something that is worrying because we have no idea why they have taken loans; they could have spent the money on something that was not a necessity. But it is also possible that these people are taking loans to pay their debts. They should have sought advice from the experts, for example, the Credit Counselling and Debt Management Agency (AKPK),”

Koong Lin Koong, SME committee chairman of the Associated Chinese Chambers of Commerce and Industry of Malaysia, shares his sentiment as he believes many have plunged into bankruptcy due to the lack of financial management.


(Source: The Star)

 

Many in our society lack financial literacy and tend to make unwise financial decisions as a result. It is imperative that we plan out our spending carefully and budget our expenses by category. This allows a broad overview which enables us to pinpoint any 'spending mistakes'.


It may be hard to get started but it is essential, so do consult a financial advisor to straighten out your financial goals and avoid falling into bankruptcy. Click here for a free initial assessment.


Click 👉here for a free initial assessment.


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