KUALA LUMPUR, Nov 7 — The Bankruptcy Act 1967 will be amended to include an “escape clause” for debtors declared insolvent over unpaid debts, de facto law minister Datuk Seri Azalina Othman said.
According to The Star newspaper, the minister in the Prime Minister’s Department this was a more realistic approach in addressing bankruptcies, adding that many declared insolvent were unaware of their status as they were not served bankruptcy papers.
“We want to create a special mechanism whereby if you have a lot of debt, you can volunteer yourself for this option to find a settlement using whatever income you have.
“The Bill will offer an ‘escape clause’ for debtors. We know creditors are upset because they are owed money, but let’s be reasonable. If a guy can’t afford to pay up, we should find the best alternative to enable the repayment,” she was quoted by the English language daily.
Among things proposed in the Bill were to raise minimum debt needed to be declared bankrupt from RM30,000 to RM50,000 and to shorten the period before a person can be discharged from bankruptcy from the current five years to three years.
Social guarantors, such as those for scholarships or loans for vehicles meant for personal use, will also have protection from bankruptcy proceedings under the proposed Bill, and those who are above 60 or suffering chronic disease will be automatically discharged after they have gone through a required discharge period, The Star reported.
Azalina said she hoped the Bill will be tabled during the current Dewan Rakyat meeting and be read a second time in the next meeting in March next year.
According to the Malaysian Insolvency Department statistics, a total of 97,215 people were declared bankrupt between 2012 and September this year, with Selangor leading the list with 27,269 cases.