Move to help debtors avoid bank­ruptcy

The Sun (Malaysia) - - NEWS WITHOUT BORDERS -

THE govern­ment in­tends to in­tro­duce an al­ter­na­tive pro­vi­sion for debtors to have a vol­un­tary ar­range­ment with their cred­i­tors to pay their debts prior to be­ing de­clared bank­rupt by a court.

Min­is­ter in the Prime Min­is­ter’s Depart­ment Datuk Seri Aza­lina Oth­man Said said the pro­vi­sion, known as the In­di­vid­ual Vol­un­tary Ar­range­ment (IVA) will re­duce the num­ber of bank­ruptcy cases in Malaysia.

“There are a to­tal of 95,799 peo­ple who have been de­clared bank­rupt by the Malaysia In­sol­vency Depart­ment from 2012 to Au­gust this year. From the to­tal, 23,366 are youths aged be­low 34.

“The govern­ment is aware of this sit­u­a­tion, caused by poor fi­nan­cial plan­ning and lack of fi­nan­cial man­age­ment knowl­edge. Th­ese are the main fac­tors con­tribut­ing to the bur­den of debt among youths,” she said in a writ­ten re­ply to Datuk Shabudin Ya­haya (BN-Tasek Gel­u­gor).

Aza­lina said the Bank­ruptcy Act 1967 (Act 360) has four meth­ods to help debtors avoid bank­ruptcy.

The meth­ods are to be dis­charged in court un­der Sec­tion 33 of the Act 360, or by the In­sol­vency di­rec­tor-gen­eral through a cer­tifi­cate un­der Sec­tion 33A, can­cel­la­tion un­der Sec­tion 105, and a com­po­si­tion and debt ar­range­ment scheme un­der Sec­tion 26 of the Act.

“The govern­ment in­tends to in­tro­duce sev­eral al­ter­na­tive pro­vi­sions through the pro­posed amend­ments to Act 360, in which prior to the dec­la­ra­tion of bank­ruptcy, the debtor is given a chance to rear­range the debts with the bank or fi­nan­cial in­sti­tu­tions,” Aza­lina said.

In a writ­ten re­ply to Wil­liam Leong (PKR-Se­layang), Azlina said the Malaysian In­sol­vency Depart­ment is mak­ing amend­ments to the Act, which among oth­ers, in­volves the po­si­tion of so­cial guar­an­tors, au­to­matic dis­charge and sa econd chance for bankrupts. The depart­ment is re­view­ing a change in pol­icy to cre­ate ab­so­lute pro­tec­tion for so­cial guar­an­tors from bank­ruptcy pro­ceed­ings.

“This means no bank­ruptcy pro­ceed­ings can be taken against so­cial guar­an­tors.”

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