Good News! Automatic Discharge for bankrupts coming soon!

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asked on Feb 7, 2012 at 17:26
edited on Aug 1, 2016 at 23:21
235,908 individuals declared bankrupt as of October 2011: DG

Published on: Wednesday, December 07, 2011

Kota Kinabalu: As of October this year, a total of 235,908 individuals were declared bankrupt in the country, said the Director-General of Insolvency Department Datuk Abdul Karim Abdul Jalil.

He said based on the records of the Malaysian Insolvency Department, the main causes for bankruptcy were hire-purchase agreements (26 per cent), followed by personal loans (21 per cent), housing loans (14 per cent) and other loans including business loans and corporate guarantees.

"This places Malaysia among the countries with a large number of bankruptcies compared to the other countries, with an average of 41 individuals declared bankrupt each day," he said.

Between 2005 and October this year, a total of 14,000 cases were discharged of bankruptcy at the discretion of the Director-General of the Department of Insolvency, Abdul Karim told reporters after opening the dialogue on insolvency at the Federal Administration Complex in Likas, here, Tuesday.

The discretion refers to the bankrupt individual paying back the loan on instalments continuously for more than five years and that they offered close cooperation with the Department of Insolvency.

Abdul Karim said the Government was reviewing the Malaysian Bankruptcy Act 1967 in efforts to assist those who were declared bankrupt to continue with life without the debt burden, including automatic discharge.


Datuk Abdul Karim Bin Abdul Jalil
Current Director-General of Insolvency (DGI)
From 16.04.2009 to current.
Department of Insolvency, MDI
Prime Minister's Department

Second chance

11 December 2011
By P. Selvarani

Under proposed amendments to the law, bankrupts will soon have an opportunity to start anew after five years

Debtors will have a lot of reasons to smile once proposed amendments to the law are passed to enable bankrupts to be discharged automatically.

It is learnt that under the amendments, bankrupts may be automatically discharged after five years without having to apply to the courts or wait for the approval of the director-general of Insolvency (DGI), to be freed of the social stigma.

The Insolvency Department is seriously considering this move -- which is practised in many countries -- to give bankrupts a second chance to start anew.

The automatic discharge was proposed as the department believes making people, especially those who are honest and credible, a bankrupt for life will not benefit anyone.

"In many cases, it does not help them or their creditors as some of these people really cannot nor have the means to settle their debts.

"Some debtors are also untraceable. So what's the point of having them in our statistics? An automatic discharge will help them get back on their feet and start life afresh," DGI Datuk Abdul Karim Abdul Jalil told the New Sunday Times.

However, he said, many issues needed to be looked into.

"Should any conditions be imposed before this automatic discharge procedure is applied, especially to the dishonest and non-cooperative bankrupts? Or can the creditors or the DGI raise objections in relation to the conduct of the bankrupt? These are matters we have to thoroughly look into."

Several countries, including Thailand and New Zealand, have laws which allow for the automatic discharge of a bankrupt after three years as long as the bankrupt is not involved in fraud.

In Canada, a first-time bankrupt is automatically discharged after nine months if he fulfills all his duties and does not have any excess income. In the United Kingdom, bankrupts may be discharged after a year.

Karim said the automatic discharge was among the proposals under amendments to the existing laws to create a single Insolvency Act.

The proposed amendments have been submitted to the attorney- general.

At present, apart from paying their debts in full to qualify for a discharge, bankrupts in Malaysia can also be discharged at the discretion of the DGI.

This was made possible under amendments to the Bankruptcy Act in 2003 which gave the DGI the authority to discharge a bankrupt after five years or more.

Previously, bankrupts could only be released by the court if they paid their debts in full or if they were wrongly declared a bankrupt.

The automatic discharge proposal was mooted in 2003, but the authorities then felt that it was not the right time to introduce it.

"So, we introduced the Certificate of Insolvency instead which gave the DGI the power to discharge a person after five years or more, subject to objections from the creditor.

"And we used this certificate to save credible entrepreneurs, such as those who became bankrupt due to the economic crisis and not because of their own folly."

Since then, the department has discharged 14,174 bankrupts based on their good conduct and cooperation.

"We had also discharged extremely poor people and the sick.

"Through our outreach programme, we had personally witnessed their condition.

"Some of them were so poor or sick that they could not even make ends meet, let alone repay their debts. In such cases, we released them from bankruptcy because it would benefit no one for us to continue administering their files. Instead, it may incur us unnecessary costs."

Karim said it was necessary to streamline insolvency laws in Malaysia, such as personal insolvency (under the Bankruptcy Act 1967), corporate insolvency (which comes under the Companies Act 1965) and other related laws for a more efficient administration of insolvency cases as many of the laws now overlapped with those of other agencies.

For example, although the DGI is the official receiver and liquidator of companies, which have wound up and societies and trade unions which have been de-registered, laws pertaining to these matters are still parked under the Companies Act 1965, Societies Act 1966 and Trade Unions Act 1959, which come under the jurisdiction of the respective agencies.

"The international trend now is to put all this into one legislation to be administered by one organisation.

"We don't want the functions to overlap.

"We need a more effective and innovative insolvency administration system to create a new insolvency landscape in the country. Without doubt, an effective and innovative insolvency system will contribute tremendously to a country's financial stability."

He said on an average, 41 individuals were declared bankrupt every day.

Most of the bankrupts had defaulted on the payment of their car loans.

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answered on Mar 6, 2012 at 01:58
edited Jun 20, 2016 at 06:57
I agreed with Johan Foo (above) about voicing/petitioning for a CHANGE to the Bankruptcy Act 1967.

It is like a positive complaint. If nobody complains, nothing will change. We should exercise our fundamental rights as empowered citizens of Malaysia. We should voice it out bravely!

Our future can be affected if out-dated laws are still giving hardships to our 'rakyat'!

Below is a good article about complaining written by BULBIR SINGH of Seremban.
Please read it to understand better.

The Star Online > Focus
Monday March 5, 2012

Nothing changes if nobody complains

I AM with the sentiments expressed by columnist Wong Sai Wan in “We CAN complain and gripe” (The Star, March 2). It is good for us to complain. If you have something to say, say it. And if not you, who will?

And I agree, too, that we must know the difference between a gripe and a grievance, and what is important and what is trivial. Stop being petty when complaining. Get to the real stuff.

Complaining is a means for people to assert their rights and stand up for themselves. I do that many a time in the newspaper columns. My wife says no one complains more than me! I wish more people would complain.

Instead of feeling empowered, the average citizen may see complaining as both futile and an unsavoury act.

There could be a host of reasons why nearly three quarters of our population will not make a complaint. Some can’t be bothered with the hassle, others don’t know how to go about it, some don’t want to be seen as moaning, and many don’t think it will do any good.

And often we grumble to our friends about being charged too much for a slapdash floor fitting, or how their over-priced train commute is regularly delayed. But, they just don’t want to actually do anything about it.

A food and drinks website survey revealed that 38% of people would never complain about a bad restaurant experience no matter how terrible it was, and 20% of customers don’t complain about unsatisfactory products.

But if nobody complains about substandard products and services then nothing will change.

To complain is to assert one’s rights; to stand up for oneself and not be ripped off or taken advantage of.

It might involve demanding a product replacement, compensation or simply the satisfaction of telling someone that his service is just not good enough.

But it also has significance beyond the personal, because to complain is to say the system is flawed and needs to be improved, and the implications of this can benefit other people and the service providers themselves.

In fact, the word “complain” has more in common with positive action words like “protest” and “feedback”, and less in common with whining self-pity.

A prime example of this positive side is the growing trend of organisations to welcome complaints from its customers.

Forward thinking companies or organisations are always looking for ways to improve their services, and complaints provide an invaluable aid to see where they have gone wrong and what they can do to improve.

This positive attitude towards their more critical audience also helps to maintain customer loyalty.

That said, it is time consumers learn how to make an effective complaint and get redress. I note, and sadly, that many do not know how to lodge a complaint.

In making a complaint please make your letter brief and to the point. The letter should contain all the important facts about your purchase.

Describe your purchase, including any information you can give about the product or service such as serial or model numbers or specific type of service.

Be sure to include the date you made your purchase and location of the store, if appropriate. State what you feel should be done about the problem and how long you are willing to wait to get the problem resolved.

Make sure that you are reasonable in requesting a specific action.

Include copies of any documents regarding your problem, such as receipts, warranties, repair orders, contracts and so forth.

Be reasonable, not angry or threatening, in your letter. Remember, the person reading your letter may not be directly responsible for your problem, and can possibly help resolve it.

Finally, keep copies of your complaint letter and all related documents for your own records, and you may want to send a copy to a state consumer body or to Fomca, the national consumer body.

If you are unsuccessful in getting your complaint resolved directly with the company and must contact other sources for assistance, make reference to your letter.

If you have to contact other sources, such as the Better Business Bureau, or a trade association, be sure to give information about what you have done thus far to get your complaint resolved.

You may also write to the Prime Minister’s Department, which has a bureau for consumer complaints. It can assist you.

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answered on Mar 30, 2012 at 13:26
Anyone know how's the progress on auto-discharged? Any good news? I've sent an email to our PM & DGI.
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answered on Apr 2, 2012 at 17:54
But the things is, the law should prevent the creditors or bank to add up or charged many miscellaneous charges to the debtors and make it until they can file a bankruptcy and up the limit to RM100K before it can become a case, now the problem is that the bank or the debts collector will any how add up or top up the charges from no where so that even the debtors pay any amount also cannot cut the interest or the amount until everyone give up and wait for bankruptcy!
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answered on Apr 15, 2012 at 18:44
edited Jun 20, 2016 at 07:01
So how is the progress now? Where can I check it?
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answered on Apr 16, 2012 at 15:13
Looks like auto-discharged may just be a bankrupts dream ! I wonder what bankers gain keeping one as a bankrupt for years knowing that the person has no means to settle the loan. Worst is being a guarantor.
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answered on Sep 6, 2012 at 20:21
Anyone knows what's the latest update?
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answered on Sep 28, 2012 at 23:48
edited Jun 20, 2016 at 07:03
No surprise in budget 2013 for bankrupts... thus so, we still keep on being bankrupt ya...
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answered on Sep 29, 2012 at 17:43
So disappointed !
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answered on Sep 30, 2012 at 19:24
edited Jun 20, 2016 at 07:05
Whether the current government or the opposition runs the country, bankrupts will still be bankrupts. Get out of the cocoon guys, if I can do it no reason you can't. I'm a bankrupt but life is good for me. Again, learn to beat the system, easy if really want to.
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answered on Sep 30, 2012 at 21:14
edited Jun 20, 2016 at 07:07

How nice if I ever get a chance to buy you coffee. You emit such strong positive outlook on all of this. Perhaps then, that strong vibe can rub off on me a bit so I can be a bit bolder.
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