Studies indicate that every day, at least 60 Malaysians between the ages of 35 and 44 file for bankruptcy. Despite this, not much is known about this phenomenon in the country. Here, we’ll be detailing everything from what bankruptcy is to how it affects your credit report.
What Is Bankruptcy In Malaysia?
A debtor is declared legally unable to pay back what they owe. It is also done with the court order, commonly referred to as the Adjudication Order, obtained after due process from the High Court.
Requirements a Person Must Meet Before They Can Be Declared Bankrupt
Some criteria that need to be met are;
- The individual must be unable to pay back a sum of RM30,000.
- The sum owed must be ascertainable. It means that the credit must be a liquidated sum.
- The debt must have defaulted for at least six months first.
- The debtor must have resided in Malaysia for at least 12 months.
For many, the question is, once a person has finally been declared bankrupt, how long will this fact remain in their credit report? We’ll be delving into that now!
How Long Will, a Bankruptcy Record, Remain Visible On a Debtor’s Credit Report?
This record will remain visible on all credit reports obtained until two years after full payment must’ve lapsed. In addition to this, it takes CTOS up to 14 working days to update the new information in their database.
Documents Needed To Effect The Update
This update won’t happen as you will need to present a few documents first to show that you are, in fact, no longer bankrupt. Some of the items you’ll be required to tender to that end include;
- A letter of settlement for legal matters or cases.
- A release letter from MDI effectively frees you from the bankruptcy claim.
What Happens To a Bankrupt In Malaysia
Anyone who has filed for bankruptcy and had the claim approved is referred to as a bankrupt. Some things that may happen to such individuals include but aren’t restricted to:
- Assign to the Director-General of Insolvency or DGI.
- Have a travel ban imposed on them.
- Have restrictions imposed on their credit line.
- Have to forfeit their assets.
- Have employment restrictions placed on them due to the policies of several professional organizations and licensing bodies.
How To Deal With Bankruptcy
While becoming bankrupt is a grave situation, it’s not a death sentence. You can slowly find your way back by taking advantage of resources like the Credit and Debt Management Agency (AKPK). It’ll take a lot of discipline and hard work, but there’s no doubt that it’s certainly doable if you put your mind to it.