Fairer sys­tem for guar­an­tors

They won’t be de­clared bank­rupt if bor­row­ers fail to re­pay debts

The Star Malaysia - - Nation -

KUALA LUMPUR: So­cial guar­an­tors will no longer be de­clared bank­rupt if bor­row­ers fail to re­pay their debts. How­ever, this does not ab­solve the so­cial guar­an­tors from other forms of le­gal debt re­cov­ery.

This was one of the key points in the Bank­ruptcy ( Amend­ment) Bill 2016 which was passed in the De­wan Rakyat yes­ter­day.

So­cial guar­an­tors are de­fined as those who do not profit and es­sen­tially pro­vide a guar­an­tee for an ed­u­ca­tion loan, hire-pur­chase trans­ac­tions for per­sonal or non-busi­ness use, or a hous­ing loan for per­sonal dwellings.

“So­cial guar­an­tors can­not be de­clared bank­rupt but other ac­tion can be taken by cred­i­tors.

“For ex­am­ple, they could freeze an ac­count or seize the prop­erty (of the so­cial guar­an­tor),” said Min­is­ter in the Prime Min­is­ter’s De­part­ment Datuk Seri Aza­lina Oth­man Said when wind­ing up the de­bate on the Bill.

“In pre­vi­ous cases, many so­cial guar­an­tors were made bank­rupt. We want to bring new changes in the process and a sys­tem which is fairer to so­cial guar­an­tors,” added Aza­lina.

She, how­ever, noted that the changes in the bank­ruptcy law will not ab­solve bor­row­ers from their le­gal du­ties to re­pay their loans.

Aza­lina said so­cial guar­an­tors have al­ways been the vic­tims and are de­clared bankrupts, so the amend­ments will en­sure they are bet­ter pro­tected.

She also said the cred­i­tors must prove to the court that they have taken all steps to re­cover the loan from the bor­row­ers.

Among other changes in­clude rais­ing the min­i­mum thresh­old of a per­son’s debt from RM30,000 to RM50,000 be­fore they can be de­clared bank­rupt.

Aza­lina also said the term “bank­rupt” will also be sub­sti­tuted in fu­ture pro­ceed­ings with the word “in­sol­vent”.

A per­son can also be au­to­mat­i­cally dis­charged as a bank­rupt af­ter three years from the date of fil­ing of the State­ment of Affairs ( Peny­ata Hal Eh­wal).

“There will also be pri­or­ity on serv­ing the bank­ruptcy no­tice and petition through per­sonal ser­vice or reg­is­tered posts with the ac­knowl- edge­ment of the re­ceiver,” said Aza­lina.

She said the Gov­ern­ment was also look­ing into set­ting up a Res­cue Mech­a­nism and in­tro­duc­ing a sin­gle bank­ruptcy or­der to re­place the present re­ceiv­ing or­der and ad­ju­di­ca­tion or­der.

The pro­posed Bill is also look­ing into cre­at­ing an In­sol­vency As­sis­tance Fund and the re­lease from bank­ruptcy with­out ob­jec­tion by the cred­i­tors for cer­tain groups of peo­ple.

This group in­cludes so­cial guar­an­tors made bank­rupt un­der the Bank­ruptcy Act 1967, those who have died, those cat­e­gorised as peo­ple with dis­abil­i­ties (OKU) by the Wel­fare De­part­ment and those cer­ti­fied by gov­ern­ment med­i­cal of­fi­cers as suf­fer­ing from chronic or se­ri­ous dis­eases.

Ear­lier, Aza­lina said that ac­cord­ing to the Malaysian De­part­ment of In­sol­vency, there had been 169,927 cases of bank­ruptcy from 2008.

As of Novem­ber 2016, the Credit Coun­selling and Debt Man­age­ment Agency (AKPK) has helped re­solve 11,935 cases in­volv­ing debts to­talling RM488mil.

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