Sometimes during the course of our work, we need to determine whether a particular person is adjudged a bankrupt so what should we do?

We can go to the Director General of Insolvency (DGI) office and obtain a copy of search form for RM1. After filling up the form, the DGI will then send it over to its Putrajaya headquarters where the search will be conducted. Once completed, the official result will be sent to the address which we have provided on the form. All information can be obtained for a fee of RM5.

Append below some other basic understanding of bankruptcy in Malaysia:

Declaring ourselves as a bankrupt when the following happens:

• Unable to settle the debts following which we need to file a petition to the court or
• The creditor will file the petition upon our failure to meet the Demand Notice.
  
  

Before presenting a petition, the following criteria have to be met:

• the minimum amount of debt is RM30,000;
• the debts must be in default for at least six months; and
• the debtor must reside in Malaysia for at least a year before the petition date.

Some Amendment to the Bankruptcy Act, 1967

Bankruptcy in Malaysia is governed by Bankruptcy Act, 1967. The latest amendments to the Act were passed by the Parliament on June 2003 and came into effect on October 2003. The amendments, among others include:

• An increase of the minimum amount of debt from RM10,000 to RM30,000; and
• Change of name of the Official Assignee to the Director General of Insolvency (DGI)

One needs to understand being declared a bankrupt free oneself from any other legal proceedings filed by the creditors, but at the same time, it also ties onself down with unnecessary restrictions which can limit our personal and professional development.

Some Major Restrictions imposed on a bankrupt include the following:

As a bankrupt:

• Cannot hold certain public offices;
• The DGI will administer your assets which include identifying those that can be disposed of to pay the creditors;
• It is an offence  to obtain any credit, by ourselves or with others;
• Not allowed to conduct any business, either directly or indirectly;
• Cannot promote or manage a company without the permission of the DGI;
• The passport will be kept by the DGI and can only be released with his permission; and
• Can only open a bank account with the approval of the DGI and the account is for the sole purpose of crediting the income.

How to Discharge From Bankruptcy:

·         Paid all the debts in full to the creditors;

·         As a guarantor of loan, have suffered due to financial woes, sick, old or jobless;

·         With the discretionary power on the DGI, the bankrupt can be discharged of bankruptcy even though he/she still have outstanding balance of debts.

The DGI, however, has to evaluate certain criteria before granting the bankrupt  the release. Among the criteria considered are:

• Bankrupt’s conduct and behavior before and after being declared a bankrupt;
• The reason for being declared a bankrupt;
• Age;
• Financial status; and
• Ability to repay debts

Therefore, based on the criteria, the bankrupt in order to stand a better chance to be discharged from bankruptcy needs to make regular payments and fully cooperate during the proceedings rather than be difficult and disrespectful of the law. Note that by meeting the aforesaid criteria does not grant the bankrupt automatic discharged, he/she still need to apply to the DGI only after five years from the date of the “Receiving and Adjudication Order”.

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