PETALING JAYA: Debt advisory agencies and financial planners have been credited with reducing the number of bankrupts in the country from a high of 16,482 in 2018 to only 4,491 as of this September.
According to the Malaysian Insolvency Department, 58% of those declared bankrupt from 2018 to September this year were aged between 25 and 44.
Another 0.5% were under 25 years old, including six this year.
Personal loans topped as the biggest cause of bankruptcies among Malaysians since 2018, chalking up 42% of the total number of cases.
This is followed by 14.5% of bankruptcies due to vehicle purchases and 13.8% from business loans.
Financial planner Marshall Wong said although half of the bankruptcies recorded were among youths, the data shows the number declining between 2018 and 2022, which is a positive reflection of young Malaysians taking measures towards their financial well-being.
“We should give credit where it’s due. The bankruptcy rate is declining faster for those younger than 45 years old. I believe this is because youths are a lot smarter in managing their finances now than five years ago,” he told theSun.
Wong said social media played a major role in disseminating information and strategies to manage finances properly, especially through content disseminated by credible people who shared their views about money management.
He said organisations such as the Credit Counselling and Debt Management Agency (AKPK), the Financial Planning Association of Malaysia and the Malaysian Financial Planning Council should be credited for lowering the bankruptcy rate as they have also done their part in promoting financial literacy through events and campaigns, which contributed to the lower figures.
On reasons for bankruptcies, Wong emphasised that personal loans topped the list because there are many reasons for borrowers to take up such loans. Among the reasons could be medical expenses, house renovation costs and children’s education expenses.
“It is also worth noting that there is a drop in bankruptcies due to credit card loans from 10.99% in 2018 to 3.99% in 2022. I think this is quite significant and a good sign due to the high interest imposed on credit card (debt) compared with other loans,” Wong said.
An AKPK spokesman told theSun that Malaysians have to take control of their finances and emotional state of mind to prevent negative consequences that could derail any financial planning.
AKPK provides financial education, advisory and debt management programmes for those who were declared bankrupt and others seeking advice before committing to any financial agreements.
Its debt management programme helps borrowers by customising a personalised debt repayment plan.
The plan helps to reschedule or restructure loans and financing such as housing and personal loans or financing, hire purchase and outstanding credit or charge card balances that are due to financial service providers under the purview of Bank Negara Malaysia and other institutions, including the National Higher Education Fund, Tekun Nasional Berhad and cooperatives participating in the programme.
From its establishment in 2006 to September 2022, AKPK has assisted over 1.2 million Malaysians through its financial advisory services.
AKPK has also helped 400,000 individuals through its debt management programme and settled a total of RM2.2 billion in outstanding loans.
“Our financial education aims to nurture more financially astute borrowers and consumers who would take control of their finances and at the same time, promote a good payment and repayment culture through the wise use of credit, which is the best prevention against bankruptcy.
“The correct public perception of financial wellness is crucial for people to take all financial education and advisory opportunities offered by AKPK or other legitimate institutions,” the spokesman said.
