Bank Debts How To deal with it when it is over 6 years with no repayments? What is NPL (Non Performing Loans) by BNM

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asked on Feb 23, 2021 at 16:59
edited on Feb 23, 2021 at 17:53
by   jeff005
Financial difficulties are faced by many people at many stages of their adult life after leaving school /College /University. As in Malaysia, there exists many easy small loans given out by banks as well as easily dispensed out credit cards.

To some, defaults to repayment often occurs due to sudden loss of jobs, unable to work due to sudden prolong medical illness. After a long period of no repayments of the loans / credit cards and when suddenly a lawsuit started by the Creditor Bank with a much enormous defaulted debt, people are unable to deal with it especially when BCs (Bill Collectors) are involved.

This topic is in conjunction with the recent Query asked in this forum :

Let's start a Constructive Discussion on this issue as happened to many people in everyday life.
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answered on Feb 23, 2021 at 17:31
What is NPLs (Non Performing Loans) as per BNM classifications.

1. Non Performing Loans are defined as loans overdue for more than 90 days

2. A non-performing loan (NPL) is a loan in which the borrower has not made repayments of principal and/or interest for at least 90 days. When a bank is unable to recover non-performing loans, it can repossess assets pledged as collateral or sell off the loans to collection agencies.

3. A nonperforming asset (NPA) refers to a classification for loans or advances that are in default or in arrears. A loan is in arrears when principal or interest payments are late or missed. A loan is in default when the lender considers the loan agreement to be broken and the debtor is unable to meet his obligations.

4. Banks sell non-performing loans to other investors in order to rid themselves of risky assets and clean up their balance sheets. Banks can also avoid having to pay back taxes, and they can expedite the recapture of capital for reinvestment.

5. When a nonperforming loan is written off, the lender receives a tax deduction from the loan value. Not only do banks get a deduction, but they are still allowed to pursue the debts and generate revenue from them. Another common option is for banks to sell off bad debts to third-party collection agencies.
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answered on Feb 23, 2021 at 20:22
edited Apr 15, 2022 at 23:33
Glossary of terms commonly applied in my personal discussions/comments in this forum as in my inuit language

1. BNM  (Bank Negara Malaysia
2. BCs  (Bill Collectors)
3. BDB  (Bad Debts Buyers)
4. JID  (Judgement In Default - Perhakiman Ingkar)
5. JDebt  (Judgement Debt)
6. JDebtor  (Judgement Debtor)
7. JC  (Judgement Creditor)
8. BN (Bankruptcy Notice)
9. Creditors Petition  (Notis Pemiutang)
10. BO  (Bankruptcy Order)
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answered on Feb 23, 2021 at 20:55
edited Apr 15, 2022 at 23:35
Currently this website is flooded with enquires regarding old debts which was not settled years ago, some even over 12 years and most of these debts were sold to BDBs which resulted in a renew barrage of calls for repayments.

These bad debts were sold to buyers via a Vesting Order (court Order), hence they have the rights to call and contact the debtor and visit your house and even at the office (which must be conducted outside the office or in a private room within). If a debtor refuses to entertain BDBs calls, they reserved the right to physically locate you.

The usual questions asked by them is when the debtor can repay their old loans. There can be no answer as "esok lusa". If a debtor cannot really afford to pay, then negotiate for a discounted amount and if still cannot afford, then inform them that "Let's settle it in court" which is the correct legal recourse for creditors.. There must be an appropriate answer for them to report back to their office. "Owing Debts need not pay back kah" is the usual statement. If there is no answer from the debtor via calls and messages left behind in hp as well as in office, reporting to the police for harassment is useless. The police will also ask the complainant  to settle direct with the BDBs as they are the legal creditors with the same quote "Ada hutang tak payah selesai kah? Debtors have legal rights, conversely Creditors have their legal rights too. People in debt issues must understand these points.

Note that, when the debtor lodge a police report, your house address and usual hp number will be recorded for investigation purpose. If one give a fake number, it is akin to making false details in police report, one can be jailed and it is not for the debt. Owing creditors money will not result in jail term but making/giving fake personal info in police report may result in jail offences. It is a felony charge. The debtor will have to take into consideration of exposing personal contact details to the BDBs. The creditor can extract a copy of the report.

I would advise forumers here to avoid advising debtors to make police reports for creditors harassment if possible, unless there is sufficient solid proof. Threats of physical or death is a capital offense.

How to deal with "Vesting Order", read here:
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answered on Feb 23, 2021 at 21:17
edited Feb 23, 2021 at 21:20
by   jeff005
Back to the original creation of this discussion topic

@ Nor MN

You have enquired here on much the amount now, it could be 3-4 times now due to all types of bank charges. The most important thing you have to do is to check with BN CCRIS and go direct to any Court Complexes to check if a lawsuit have been levied on you and/or you have been made a Judgement Debtor (legal terminology). Extract all copys if there are records of lawsuit.

Since the debt is over 6 years, if the bank launch a lawsuit on you now, you can apply the LA1953 (Had Masa 1953) to set aside /cacat the lawsuit. But you must confirm if there has been a lawsuit for this debt or not. 

The main issue is that you may not receive any lawsuit notifications due to shifting (and not informing /updating the bank creditor of the changes which is compulsory under Laws). 
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answered on Feb 26, 2021 at 15:00
edited Mar 29, 2022 at 19:41

1. What does it mean that  bank sells non performing loan to third party? And what does the third benefited from buying NPL from banks?

2. I have been bankrupt since 2016. As a requirement, I need to list all the banks that I have faulted in my P.O.D. Few weeks ago, I have a call from third party saying that they have bought my loan from the bank that I have listed as my P.O.D. Is there any impact on me as a bankrupt? 

3. In the future, if I were to apply for discharge, Can this NPL loan interfere with my application? Or can it make me bankrupt once again?
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answered on Feb 27, 2021 at 21:19
edited Mar 29, 2022 at 19:42
@ Johndoe1  ,2,3...

1. What does it mean that  bank sells non performing loan to third party?

All Loans from Financial Institutions (registered with BNM) that were defaulted (turned bad) are deemed as NPL by the policies of BNM.

2. What does the third benefited from buying NPL from banks?

The third party is known as the buyer (Penerima), the seller (Pemindah) have sold all the rights to this debt via a Vested Order issued by the High Court. The buyer usually purchased the debt at a price of around 3-5% of the registered balance of the defaulted debt. Price depends on the age, condition of the debt. It is "sold" in bulk and in batches usually in hundreds with no selection. Let's say Debtor XYZ owes RM 40,000 as at sold date, the new creditor (buyer) can collect to a maximum of 40K (if they can find the missing debtor of the bank).

3. I have a call from third party saying that they have bought my loan from the bank that I have listed as my P.O.D. Is there any impact on me as a bankrupt?
Just reply to them that you are a bankrupt and ask the new creditor to file POD to JIM. There are rare occasions whereby administrative errors had occurred in the records of the bank. The new creditor cannot collect from you but collect via JIM as a POD creditor. There can only be one POD creditor for this registered debt. If a portion of your instalments has been allocated to the initial bank, the new creditor will take over that bank's rights. However there is no laws that state the new POD creditor can object to any application for discharge of bankruptcy. They are not original POD creditors at point of reporting in to JIM as stated in the S.O.A. and this is my personal opinion and interpretation  of bankruptcy laws.

3. In the future, if I were to apply for discharge, Can this NPL loan interfere with my application? Or can it make me bankrupt once again?

As stated in (2) above, they have no rights as this the oversight /error of the bank who sold the debt by vesting order. A debtor cannot be "punished" twice for the same debt. In the first place the this POD bank creditor cannot sell away a debt that had been adjudged in a bankruptcy court. It is a mockery of the Judicial Systems.

If the bankrupt did not named this bank debt in the S.O.A., there is a slight possibility, depending on circumstances, can be bankrupted for this "unnamed debt". It is not like "again". It is a new lawsuit.

Notes :

Ref : Section 49 Insolvency Act 2017
Provisions as to second bankruptcy
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