AKPK ready to come to rescue of debtors on brink of bankruptcy

29 Jan 2018 / 20:50 H.

KUALA LUMPUR: Malaysians at risk of being declared bankrupt can now seek the help of Credit Counselling and Debt Management Agency (AKPK), a unit of Bank Negara Malaysia, as a get-out-of-jail card.
One of eight policy changes under the revised Insolvency Act 1967 now allows AKPK the legal right to intervene on behalf of such individuals by stalling bankruptcy action and bringing banks to the negotiation table.
AKPK will be able do so under the “voluntary arrangement” (VA) mechanism which allows it to act as a nominee for the individual. According to AKPK CEO Azaddin Ngah Tasir (pix), it is yet to handle its first case under the mechanism which came into effect in October 2017, with the enforcement of the Insolvency Act 1967 (which incorporates major amendments to its predecessor, the Bankruptcy Act 1967).
Based on Insolvency Department statistics, a total of 100,610 individuals were made bankrupts between 2013 and December 2017, in which 34% bankrupts were between 35 and 44 years old. Of this number, almost 70% are men.
The VA involves an application to the court for an interim order, where during its effective period, no bankruptcy petition and other legal process may be commenced or continued against the debtor without permission from the court.
Accordingly, Azaddin said, the agency will be given 90 days from the interim order to assist the debtor to prepare a debt repayment plan for his creditor.
“They (borrowers) can come to us and we will evaluate whether they are eligible for us to represent them as a nominee. We will look into their affairs and see how best they can make payments. We will then talk to the creditors and restructure the loans for them, once we’ve got the approvals from the court,” he added.
Debtors will be charged up to 5% of the outstanding debt as a fee for AKPK’s service.
In the event a debtor fails to comply with any of the obligations under the VA, Azaddin said, the creditors bound by the Act can continue to proceed with the bankruptcy petition against the debtor.
Other core changes to the Act include the setting up of the Insolvency Assistance Fund to improve the administration of bankruptcy cases and a release from bankruptcy without objection by the creditors for certain groups of people.
These include social guarantors made bankrupt under the Bankruptcy Act 1967, those who have died, categorised as people with disabilities by the Welfare Department and certified by government medical officers as suffering from chronic diseases.
The amendments also include raising the debt threshold to RM50,000, at least, for bankruptcy declarations, from RM30,000 previously, and to automatically release bankrupts within three years after meeting the target contribution.
From 2013 to December 2017, the courts cleared 1,447 bankruptcy cases while 12,459 more cases were terminated upon annulment of the bankruptcy order. A total of 46,329 cases were discharged via insolvency certificate from the director-general. As of December 2017, AKPK has helped resolve 15,439 cases involving debts of RM617.4 million.
According to AKPK, the reasons that contribute to debt problems include poor financial planning, high cost of living, failure/slowdown in business, high medical expenses as well as job loss.

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