Budget 2024: Putrajaya ups automatic bankruptcy discharge limit to RM200,000

KUALA LUMPUR, Oct 13 — The automatic discharge of bankrupts announced earlier this year will be expanded next year to those with debts of under RM200,000 as part of Budget 2024, Prime Minister Datuk Seri Anwar Ibrahim announced today.

Anwar, who is also the finance minister, said this was an expansion of the “second chance policy” that automatically discharged bankrupts under the age of 40 and with debts of no more that RM50,000 implemented under the Insolvency (Amendment) Act 2023.

While tabling Budget 2024 today, he said that as of July 2023, nearly 14,000 cases of bankruptcy with debts under RM50,000 have been discharged from bankruptcy.

“The implementation of the Second Chance Policy under the Insolvency Act 2023 has also automatically discharged current and backlogged cases that meet the criteria for bankruptcy declaration,” he said in his speech.

Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman recently announced that the amendments took effect on Oct 6.

She said the enforcement of Act A1695 demonstrated the government's concern to give bankrupt individuals a second chance to live a better life as well as contribute to the country's economic development.

On March 10, the Cabinet has agreed with the proposed amendment to the Insolvency Act 1967 (Act 360) following discussions with stakeholders, including the Attorney-General's Chambers; Office of the Chief Registrar of Federal Court; Finance Ministry; Bank Negara Malaysia; Inland Revenue Board; Employees Provident Fund; Credit Counselling and Debt Management Agency and the Association of Banks in Malaysia.

The key amendment involved in Section 33C of the law is aimed to assist bankrupt individuals to be discharged automatically between three to five years from the date on which the debtors submit the declaration of assets.

Azalina said that the amendment is in line with the objectives of the second chance policy, the amendments to section 33C and subsection 33B (2A) of Act 360 are enforced retrospectively to bankruptcy cases administered before the enactment of Act A1695.