An average of 18 people were declared bankrupt daily, in the first five months of 2022.

The shocking data was revealed by the Insolvency Department in its website recently, reported The Star, noting that 2,694 people were declared bankrupt during the period - bringing the total number of bankruptcies in the country to 274,628.

According to the report, the biggest bulk (60 percent) of the 46,132 individuals declared bankrupt from 2018 to May this year were aged between 25 and 44-years-old, while more than 200 cases involved individuals aged 25 or younger.

The biggest contributor for bankruptcy was personal loans, followed by hire purchase loans, business loans, housing loans and outstanding credit card payments, the data said.

However, the annual bankruptcy rates have steadily gone down in the last four years - from 16,000 cases in 2018 to about 6,500 cases last year, said the report.

This is due to the amendments made to the Insolvency Act in 2020 that increased the bankruptcy threshold from RM50,000 to RM100,000, the report added.

More than half (58 per cent) of those declared bankrupt from 2018 until May this year owed between RM100,000 and RM499,000, while about eight per cent owed amounts between RM500,000 and RM999,999. Only about five per cent of the cases involved debts over RM1 million.

As for states, Selangor has the highest number of bankruptcies (72,608 cases) until May this year, followed by the Federal Territories (46,876) and Johor (32,441) cases.

Shocking numbers indeed. Perhaps this is why the Credit Counselling and Debt Management Agency (AKPK) has advised the public to seek their advice first before making new financial commitments, instead of coming to them when they are already drowning in debt.

According to the report, about 85 per cent of those who have sought the agency's Debt Management Programme (DMP), which is offered for free, have successfully regained control of their finances.

More than 1.2 million individuals have received AKPK's advisory service since it was incepted in 2016, and during the period, over RM2.1 billion in outstanding debts have been settled.

Source: The Star
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