The number of people declaring bankruptcy has increased significantly in the first 5 months of 2022, the Insolvency Department revealed.
According to the data the department share on its website, it showed that between January and May, 2,694 persons were declared bankrupt, bringing the number of bankruptcies in the country to 274,628.
The statistics also showed that nearly 60% of those who were declared bankrupt from 2018 until May this year were between 25 and 44 years old. Another shocking fact is that more than 200 of those declared bankrupt since 2018 were aged 25 or younger.
Meanwhile, it was found personal loans are the leading factor in bankruptcy, with 42% of the 46,132 persons declared bankrupt from 2018 until May this year for failing to repay their personal loans, followed by nearly 15% who listed vehicle purchase as a factor, and more than 13% declaring bankruptcy because of a business loan.
Commenting on this issue, consumer financial expert Prof Dr Mohamad Fazli Sabri said that despite the numbers being far lower than in previous years, it is still worrying to see people getting bankrupt.
“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,” he was quoted as saying by The Star.
The data from the Insolvency Department also showed a steady decrease in the number of bankrupts over the years. Those filing for bankruptcy totalled 16,482 in 2018; which fell to 12,051 in 2019; 8,351 in 2020; and 6,554 last year.
Fazli said the decrease could be attributed to the amendment in the Insolvency Act in 2020 which raised the bankruptcy threshold from RM30,000 to RM100,000.
Meanwhile, Corporate communications head of the Credit Counselling and Debt Management Agency (AKPK) Sazlin Zainal Abidin advised the public to seek help from AKPK before taking applying for loans and not only when they are already in debt.
“The public should approach AKPK even prior to taking any new loans. Then we will help them to look at their overall financial situation and advise them accordingly.
“Our services to individuals are free of charge and without the use of any third-party agents,” she was quoted as saying.
Sazlin added that 85% of those who reached the end of AKPK’s Debt Management Programme managed to settle their debts and regain control of their finances.
The highest number of bankruptcy declarations up to May 2022 comes from Selangor with 72,608 cases, followed by the three Federal Territories of Kuala Lumpur, Putrajaya and Labuan combined (46,876) and Johor (32,441).