THE government’s decision during the Budget last week to remove the bankruptcy status of some 120,000 people declared insolvent has given this demographic a new dawn.

Bankrupts told The Malaysian Insight that the label had hung over their heads and made their lives difficult.

A woman who wanted to be known as Salawati said she was declared bankrupt after being forced into a lot of debt about 14-years-ago when her ex-husband was unemployed.

“His unemployment forced me to take on personal loans and credit cards until I was listed as bankrupt with a debt of RM119,000”, she said.

The 53-year-old former bus driver said she only knew she was bankrupt in 2009 when she could not withdraw her salary.

She admitted that her life had been in turmoil after being declared bankrupt, including having to borrow from illegal moneylenders.

“I divorced my husband, was fired from my job and had to raise two young children.

“Everything happened within a year,” she said.

“My bank account was frozen, employers don’t want to hire people who are bankrupt, I had to bear all this while raising two children,” she added.

According to Salawati, it was “one of the best plans” for the government to lift her status.

“This bankruptcy has been a burden for our family for 10 years,” she said.

During the presentation of the Budget last week, Prime Minister Anwar Ibrahim announced the relief for 120,000 people declared bankrupt nationwide.

Salawati was spotted at the Malaysian Insolvency Department’s (AKPK) office in Kuala Lumpur yesterday, first in the queue to apply for bankruptcy relief on the first day the relaxation came into effect.

“I got the release today. They have already issued the release certificate,” she said.

The first tranche of applicants must have been declared bankrupt for five years with an outstanding debt of less than RM50,000. They must also no be subject to any proceedings or investigations under the Insolvency Act 1967.

Meanwhile, a former journalist who declined to be named said his release gave him new hope.

The 45-year-old and his wife were declared bankrupt after they were named guarantors for his father’s company, which was closed in 2005.

He had tried to sell houses and shops to clear the debt.

“Even though we mortgaged all the properties we had, we were still plagued by bankruptcy.

“We finally found the light today when we were released from this burden,” he said.

“When my father was still alive, he tried several times to apply to be released from bankruptcy but his wish was not fulfilled,” he said.

A woman by the name of Sherli, 49, was declared bankrupt in December 2011 due to a debt of RM26,400 on a car loan she took out for a friend.

“My name was used to buy a car in 2007. He did not pay the debt to the bank to a point where my account was frozen and my name was blacklisted,” she said.

According to Sherli, after negotiations with the insolvency officer in Kuantan, Pahang, she started paying off her debt in instalments between January 2012 and May 2022.

Sherli said that her life had not been peaceful and it had been difficult to go about her daily life, further adding that as a bankrupt she could not go abroad.

“I lived like a refugee in my own country. All my benefits and rights as a Malaysian were denied just because I was bankrupt,” she said.

Anwar, when announcing the relief, said it would be a second chance for bankrupts.

In the short term, the government is to amend the Insolvency Act 1967 to include an automatic relief provision, which is expected to be brought before parliament soon.

According to data from the AKPK and based on almost 50,000 cases in the past five years, failure to pay off personal loans, business hire-purchase agreements or business loans are among the main reasons why people are declared bankrupt.

Of those, two out of every five cases stem from personal loans. This included 4,653 cases of unpaid housing loan arrears and 3,936 cases of credit card debt. – March 2, 2023.