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.