Comprehensive Guide To Understanding Bankruptcy

2 min readMar 29, 2024
Comprehensive Guide To Understanding Bankruptcy

Because of the pandemic, many lost jobs, and more than a few employees have had to take pay cuts. Thanks to this, one word that has become considerably more common in Malaysia is bankruptcy. What does bankruptcy mean? Is it possible to avoid it? Keep reading to know more!

Bankruptcy — What It Means

Bankruptcy is a legal process observed by a court of law that declares an individual bankrupt because they cannot pay their debts. Because of the gravity of bankruptcy, it isn’t said lightly.

Conditions Before An Individual Can Be Declared Bankruptcy

A person can be legally declared bankrupt only if they’ve met three (3) specific conditions. These conditions are:

— The individual must owe a minimum debt of RM 100 000.

— The debt owed must’ve been unpaid for at least six (6) months.

— The individual owing must’ve resided in Malaysia for at least one (1) year.

The Best Ways To Avoid Bankruptcy In Malaysia

If you can take stock of your situation early enough, you may be able to avoid going bankrupt easily. One of the best things to do is reduce your spending and redirect those funds toward making your loan payments. But, in some cases, that alone mightn’t be enough to save you from the jaws of bankruptcy. So, if you’re experiencing significant difficulty meeting your repayment obligations, some decisive steps you can take include:

Consulting AKPK

The Agensi Kaunseling dan Pengurusan Kredit or AKPK is adept at providing financial advice to prevent ruin. Moreover, they have a host of debt management programs you can leverage. Some of these programs can initiate a dialogue -channel your bank to renegotiate your loan!

Speaking To Your Lender Or Bank Directly

All is not lost if you don’t want to go through the AKPK route. Most financial institutions in Malaysia are usually more than willing to discuss at least the possibility of restructuring your loan. Many banks are eager to cooperate with you if you are willing to repay what you owe.

Liquidating Your Assets

Another line of action you can resort to here is selling any assets you can to settle your loan. It may not be ideal as, in many cases, you may end up selling these properties for less than you feel they’re worth because of the situation’s urgency. Still, selling your assets is worth contemplating because it helps you get hold of funds you can readily put towards avoiding bankruptcy.

Bottom Line

You can take steps to secure yourself if you end up bankrupt. But, for various reasons, it’s always best not to let it come to that in the first place.




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