KUALA LUMPUR: Personal loans were the leading cause of bankruptcy cases among Malaysians from 2020 to September, accounting for 14,800 cases, reports said.

A bankrupt individual is defined as someone who has failed to repay debts of RM100,000 or more to creditors.

According to the local Malay daily Kosmo, the Malaysian Department of Insolvency (MDI) director-general Datuk M. Bakri Abd Majid said that business loans were the second-largest cause of bankruptcy, with 5,620 cases.

Other major causes included vehicle hire purchases (2,791 cases), housing loans (2,323 cases), credit card debt (1,404 cases), and other types of debt (1,104 cases).

As such, Bakri urged the public, especially young people, to resist being influenced by a lavish lifestyle that overlooks basic financial needs.

"Improper spending driven by unnecessary desires can cause harm, particularly to young individuals," he said.

He added individuals residing in more developed states like Selangor and Johor were the most affected by bankruptcy during the same period.

Selangor recorded the highest number of bankruptcies, with 24,786 cases, followed by Johor with 21,941 cases.

Other states with high numbers of bankruptcies included the Federal Territories (18,862 cases), Penang (16,533 cases) and Perak (10,398 cases).

Significant cases were also reported in Sarawak (8,975), Kedah (7,730), Muar (5,703), Negri Sembilan (4,862) and Pahang (4,279).

In terms of employment sectors, individuals working in the private sector represented the largest group of bankrupts, with 9,651 cases.

Of these, 5,099 were from the business sector, 3,606 from the public sector, and 720 were those self-employed.

As of September, there were 145,921 bankruptcy cases still under the jurisdiction of the department.

Bakri said individuals aged 35 to 44 years had the highest number of bankruptcies, totaling 11,772 cases, or 39.2 per cent of the total.

On the Second Chance Policy, which offers bankrupt individuals an opportunity for a fresh start, Bakri reported that 142,510 cases had been successfully discharged as of June.

https://www.nst.com.my/news/nation/2024/11/1135174/personal-loans-top-cause-bankruptcy-cases