KUCHING: Personal loans continue to be the leading cause of bankruptcy among young Malaysians, according to data from the Insolvency Department.
Director-general Datuk M. Bakri Abd Majid stated that personal loans make up 15,413 cases, or 49.11 per cent, of the total bankruptcies in 2024.
He noted that the number of bankruptcy cases linked to personal loans rose to 2,776 in 2024, up from 2,225 in 2023, with the majority of cases affecting individuals aged 25 to 44.
“Young people are often drawn to a lavish lifestyle, and poor financial management leads them into unpaid debt, eventually resulting in bankruptcy,” he was quoted as saying in a Berita Harian report.
He also pointed out that the situation is exacerbated by high credit card interest rates, which range from 15% to 18% annually, making it increasingly difficult to repay debts, especially for those just starting their careers.
In light of this, he stressed the need for financial institutions to implement stricter loan approval conditions for young individuals to ensure that only those who meet the necessary criteria are granted loans. He believes this could help reduce bankruptcies caused by an inability to repay debts.
The department reported that 133,844 individuals remain bankrupt, a significant decline from 233,483 in 2023. With the introduction of the Second Chance Policy in 2024, 142,510 individuals were discharged from bankruptcy, exceeding the original target of 130,000.
Bakri highlighted the importance of cooperation from bankrupt individuals to help resolve their cases. “This is why we want bankrupt individuals to cooperate and visit our offices so we can assist in resolving their bankruptcy status,” he said.
He added that restrictions under the Insolvency Act 1967, such as travel bans and prohibitions on becoming company directors, can be eased if individuals apply for permission from the Certificate of Discharge (KPI) and meet specific conditions.
