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Discharge of Bankruptcy for the Deceased

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asked on Jun 1, 2020 at 00:22
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edited on May 6, 2021 at 19:14
 
Really appreciate if I could get help & advices on how to discharge the bankruptcy status for my mom. She passed away this morning. We have been going up & down to Jabatan Insolvensi Malaysia (JIM) Melaka (while she was still here) but we got bantahan to discharge her from the 2 banks she owed. Is it an easy process to discharge her from her bankruptcy status since she passed? Really want to release her from this bankruptcy status. She was praying hard not to pass till her debt problems settled, but God loves her more. Help?
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9 Answers

answered on Jun 1, 2020 at 08:50
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If JIM discharge her bankruptcy just because she has died, then it is not fair to the creditors who still needs a fair share from the deceased's estate.

Imagine if a bankrupt has a house in Thailand but did not declare it.  If discharge is given, then the Thailand house escapes the creditors.

This is why JIM will not allow a discharge after death.
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answered on Jun 1, 2020 at 09:00
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So it’s not possible? So meaning all the debts will have to be settled by the family members?
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answered on Jun 1, 2020 at 14:37
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edited May 6, 2021 at 20:26
 
@Hanskacak

My sincere condolences for your loss of a senior citizen and loved one.

So meaning all the debts will have to be settled by the family members?
No, her ex-debts is hers only and have no bearings on any family members.
There is no need for family members to settle her debts.

Personal views:
The Melaka house is under 4 names. Regardless whoever is the borrower of the housing loan, she has a 1/4 share. Once an individual has been adjudged a Bankrupt, this quarter share is already vested under the trusteeship of insolvency. Because of 4 names, Jabatan Insolvensi Malaysia will not seize the property as she is not the borrower but will not release her bankruptcy status even after she has passed away.
There is another "Tekun" issue.

Bankruptcy Discharge:
There are no legal provisions to discharge a deceased person/bankrupt.

There are thousands of such similar types of cases of residential and commercial properties locked by bankruptcy deceased. The only option is to live in it till time immemorial.
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answered on Jun 2, 2020 at 20:08
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@jeff005

Thank you for the warm wishes. During this pandemic period, it is certainly not easy to deal with this. But we really wanted to get her debts settled tho she has left us. 

Now we’re waiting for her Sijil Kematian to further proceed with everything necessary to finally close everything that is hanging. We have contacted JIM to make pemindahan kes from JIM Melaka to JIM Shah Alam so it’s convenient for me & my husband to settle things.

We decided to let the bank lelong the house as my husband couldn’t afford to pay for the monthly installments anymore. By God’s Willing, if there are any excess from the lelongan, does it mean JIM will only utilize 1/4 of my mother in-law’s part? 

6 months back we made a trip to JIM Melaka just to find out that there bantahan from 2 credit institutions (RHB & CGC) to release her from bankruptcy status. Which was a huge bummer as we were trying to sell the Melaka house since 2018 and we failed to do so as the officers who took care of her case kept changing & we didn’t get much of a help from them.
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answered on Jun 2, 2020 at 22:21
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edited Jun 2, 2020 at 22:29
by   rara_
Bankruptcy Discharge
There are no legal provisions to discharge a deceased person /bankrupt.

There is...
Read (2a) (c)


LAWS OF MALAYSIA

Act 360

INSOLVENCY ACT 1967

Discharge of bankrupt by Certificate of Director General of Insolvency 


33a. (1) The Director General of Insolvency may, in his discretion but subject to section 33b, issue a certificate discharging a bankrupt from bankruptcy. 

(2) The Director General of Insolvency shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless a period of five years has lapsed since the date of the bankruptcy order

33b. (1) Before issuing a certificate of discharge under section 33a, the Director General of Insolvency shall serve on each creditor who has filed a proof of debt a notice of his intention to issue the certificate. 

(2) A creditor who has been served with a notice under subsection (1) and who wishes to object to the issuance of a certificate discharging the bankrupt shall, within twenty-one days from the date of service of the notice, furnish a notice of the objection stating the grounds of his objection. 

(3) Notice of every discharge under subsection (1) shall be given by the Director General of Insolvency to the Registrar and the Director General of Insolvency shall advertise the notice in a local newspaper as prescribed. 

(4) The Director General of Insolvency shall, upon the application of any interested person, issue a copy of the certificate of discharge to the applicant upon payment of the prescribed fee. 

Objection by creditor to discharge of bankrupt under section 33a 

33b. (1) Before issuing a certificate of discharge under section 33a, the Director General of Insolvency shall serve on each creditor who has filed a proof of debt a notice of his intention to issue the certificate. 

(2) A creditor who has been served with a notice under subsection (1) and who wishes to object to the issuance of a certificate discharging the bankrupt shall, within twenty-one days from the date of service of the notice, furnish a notice of the objection stating the grounds of his objection.


(2a) Notwithstanding subsection (2), no objection shall be made against— 


(a) a bankrupt who was adjudged bankrupt by reason of him being a social guarantor; 

(b) a bankrupt who is registered as a person with disability under the Persons with Disabilities Act 2008 [Act 685]; 

(c) a deceased bankrupt; and 

(d) a bankrupt suffering from a serious illness certified by a Government Medical Officer.

(3) A creditor who does not furnish a notice of his objection and the grounds of his objection in accordance with subsection (2) shall be deemed to have no objection to the discharge. 

But not sure whether the provision for discharge can apply to bankruptcy proceeding before the amendment in 2017.

Transitional provisions for States of Malaya 137. 

(1) (Omitted). 

(2) This Act shall apply to proceedings under the Bankruptcy Ordinance of the States of Malaya repealed by this Act pending at the commencement of this Act as if commenced under this Act.

(3) Any reference in this Act to a previous bankruptcy or to any order made in or in respect of a previous bankruptcy shall be deemed to include a reference to any previous bankruptcy under the Bankruptcy Ordinance of the States of Malaya repealed by this Act and to any order made in or in respect of such bankruptcy. 

(4) All orders, notices, directions and appointments made or given under the Bankruptcy Ordinance of the States of Malaya repealed by this Act and in force and effect immediately before the commencement of this Act shall continue in force and effect as if made under this Act.
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answered on Jun 3, 2020 at 00:50
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edited May 6, 2021 at 20:30
 
This comment is self deleted for possible infringement of Lawyerment's T&C and Policies.

What infringement?

My comment does not answer to the Questioner  herself, that is @HansKacak..

I shall make answers to the Questioner only, not A2A (Answer To Answer) of others and within the contents as stated by the Questioner.
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answered on Jun 3, 2020 at 03:16
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edited May 6, 2021 at 20:34
 
@HansKacak

If you are interested to know what was the comments I have posted earlier, you can ask me again via my email address (as stated on my profile page).

I do not wish to make any disparagement or enter into any altercation with others in this Q&A website especially with lawyers who had did not answer to your question in the first place. Any answer tendered should be addressed to you via @ or #.

Nobody is right or wrong. The proper manner is to answer to the Questioner not to others.
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answered on Jun 3, 2020 at 11:07
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edited May 6, 2021 at 20:36
 
@HansKacak
 
does it mean JIM will only utilize 1/4 of my mother in-law’s part? 
I will answer you via email as this portion which may involve latest Islamic Inheritance Laws of which I'm a non-Muslim and should not comment on Shariah Laws of Malaysia in public. There are two deceased names in the property. One or two may have passed away "intestate" without leaving a WILL.

there bantahan from 2 credit institutions (RHB & CGC) to release her from bankruptcy status.
The "bantahan" from Proof of Debts (POD) Creditors, have already over-rode other sub-sections of the Act even though your mother-in-law has terminal illness.

(Caveat: The above article/comment is written by a Q&A registered User. It represents a personal point of view and is in no way associated with others in this forum nor be regarded as legal advice)
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answered on Jun 3, 2020 at 12:59
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Hi @jeff005

Thank you for your extension of help. Will email you and I really hope you don’t mind.

Many many thanks!
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