KUCHING: Malaysia is facing mounting unsecured credit pressures, with personal loans now linked to nearly half of all bankruptcy cases nationwide.
Credit Counselling and Debt Management Agency (AKPK) Kuching Branch head Yeo Wee Kiak said personal loans accounted for about 46 per cent of bankruptcy cases, highlighting growing concerns over borrowing habits and repayment discipline.
He said personal loans continued to serve legitimate needs such as medical expenses, home renovations, education and shortterm financial support.
However, problems emerged when borrowing exceeded repayment capacity or was undertaken without proper long-term financial planning.
“In such situations, unsecured credit can shift from being a useful financial tool into a longterm financial burden,” he told Sarawak Tribune.
Yeo said the trend was also reflected among individuals seeking help under AKPK’s Debt Management Programme (DMP), where more than half of the cases involved credit card debt.
Personal loans, meanwhile, made up more than 30 per cent of DMP cases, underscoring how unsecured borrowing could place heavy strain on household finances when accumulated without adequate repayment planning.
He said the rapid growth of digital banking had made credit more accessible, faster and increasingly integrated into daily spending habits.
This included the rising use of Buy Now Pay Later (BNPL) services, which recorded transaction values of about RM11.9 billion in 2025 with an estimated 7.5 million active users.
Although BNPL represented only around 0.2 to 0.3 per cent of total household debt, Yeo said its rapid adoption reflected a wider shift towards convenience-driven and instant credit consumption.
“Together with sustained demand for unsecured personal loans, this points to a behavioural shift where credit is increasingly used for everyday spending rather than structured long-term financial planning,” he said.
Without sufficient financial awareness, he said, borrowers could underestimate their total obligations and face growing repayment pressure.
“While these developments improve financial inclusion and consumer convenience, they also increase the risk of multiple overlapping credit commitments that can strain monthly cash flow and repayment capacity,” he added.
Yeo said financial advisory observations also showed signs of debt stacking, where borrowers relied on new credit facilities to repay existing obligations, potentially trapping them in a cycle of financial stress.
He stressed that access to credit must be matched with financial capability and disciplined money management.
Addressing financial distress, he said, required timely intervention, proper structure and clear financial guidance.
“Structured financial advisory helps individuals better understand their financial position and identify practical pathways to regain control.
“Through personalised guidance, individuals are assisted in reviewing their income and commitments, prioritising obligations and developing realistic repayment strategies based on affordability,” he said.
For eligible borrowers, AKPK’s Debt Management Programme provides a structured repayment arrangement that consolidates multiple debts into a single manageable plan.
Yeo said this allowed for more orderly debt servicing while reducing the risk of further financial deterioration.
“To date, more than 1.5 million customers have sought AKPK’s financial advisory support to help them regain financial stability and get their finances back on track.
“Of this number, more than 500,000 customers have been assisted through the DMP,” he said.
For individuals discharged from bankruptcy under Malaysia’s Second Chance Policy, Yeo said the process of rebuilding financial stability continued long after legal resolution.
While the policy offered a fresh start, he said long-term resilience depended on stronger financial discipline and behavioural change.
“At this stage, advisory support focuses on reinforcing responsible financial habits, particularly budgeting discipline, controlled spending and cautious use of credit,” he said.
He added that sustainable financial resilience could only be achieved when individuals shifted from reactive financial decisions towards structured financial planning.
“One of the key foundations of resilience is consistent savings, even at modest levels, to build financial buffers for unexpected needs.
“Financial education also plays an important role in strengthening awareness of prudent money management, scam avoidance and long-term planning,” he said.
Yeo added that long-term financial stability ultimately depended on both professional guidance and an individual’s willingness to make financial decisions within their means.
Individuals seeking assistance can access AKPK’s MyBijakKewangan portal and financial education platform, POWER!, through the agency’s official online channels.
