Protection for debtors
Last updated on 31 October 2016 - 11:20am
KUALA LUMPUR: The government intends to propose more protection for debtors in its amendments to the Bankruptcy Act 1967.
Two major provisions the government is seeking to amend are to reduce the number of years before a bankrupt could apply to the Insolvency director-general for discharge from five year to three years and to increase the maximum threshold from RM30,000 to RM50,000.
Minister in the Prime Minister's Department Datuk Seri Azalina Othman Said told theSun that the draft bill will be tabled to the Cabinet next week.
She said currently the law allows a bankrupt to apply for a court discharge only if five years have lapsed from the date the bankruptcy order was made and that too is subject to the creditors' objection.
The government is proposing for an automatic discharge after three years of being declared bankrupt.
"Upon filing the statement of affairs, a person declared bankrupt can be discharged after three years so that they can start a new life," Azalina said.
This is because the Insolvency Department does not want the cases to be administered for too long as it will not serve any purpose or benefit any party.
The government's proposal takes into consideration the use of public funds wisely in the cost of administering the cases while saving human resource costs in the department.
"It will not bring any benefit, 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, the creditors who want to give financial assistance will be more cautious," Azalina said.
This is practised by Singapore in order to not waste public funds.
"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," she said.
Last December, Minister in the Prime Minister's Department Datuk Seri Nancy Shukri said the amendment to the Act includes the provision to help social guarantors who were also declared bankrupt by money lending agencies for loans taken by borrowers.
She had said that between 2010 and October last year, 11,159 individuals were declared bankrupt, 60.8% of whom were social guarantors.