Pro­tec­tion for debtors

> Govt plans to amend bank­ruptcy laws to en­able ear­lier dis­charge


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 in­volve the num­ber of years that has to lapse be­fore a per­son can be dis­charged from bank­ruptcy, and the amount of bad debt in­curred be­fore the bor­rower can be de­clared a bank­rupt.

Min­is­ter in the Prime Min­is­ter’s Depart­ment Datuk Seri Aza­lina Oth­man Said told theSun the law cur­rently al­lows a bank­rupt to ap­ply for a court dis­charge five years af­ter the bank­ruptcy or­der was made, and that too is sub­ject to the cred­i­tor not fil­ing any ob­jec­tion.

The gov­ern­ment is propos­ing for an au­to­matic dis­charge af­ter three years of be­ing de­clared bank­rupt, she said.

“Upon fil­ing the state­ment of af­fairs, per­sons de­clared bank­rupt can be dis­charged af­ter three years so that they can start a new life.

“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.”

Aza­lina said the gov­ern­ment’s pro­posal takes into con­sid­er­a­tion the need to use pub­lic funds wisely with re­gard to the ad­min­is­ter­ing of cases and the hu­man re­source costs in­curred by the depart­ment.

As for the quan­tum in­volved be­fore a per­son can be de­clared bank­rupt, the cur­rent thresh­old is RM30,000.

“If a per­son’s debt ex­ceeds RM30,000, he or she would be de­clared bank­rupt (if they are un­able to ser­vice the loan) but the gov­ern­ment wants to pro­pose in­creas­ing the thresh­old to RM50,000.

“This would give pro­tec­tion to the debtors and make the Act more debtor­centric,” she said.

Aza­lina said the draft bill will be tabled to the Cab­i­net next week.

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