Move to help debtors avoid bankruptcy
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.”