Bankruptcy

1.What is bankruptcy?

1.What is bankruptcy?

Bankruptcy refers to a process where a debtor will be declared a bankrupt pursuant to a court order on the creditor’s petition or the debtor’s petition. All the unsecured property belonging to the bankrupt will be vested on the Director General of...
2. Is there a minimum amount owed for a person to be a bankrupt?

2. Is there a minimum amount owed for a person to be a bankrupt?

Yes, the creditor may file for bankruptcy action against the debtor if the debt owing is more than RM50,000. However, with the introduction of the Temporary Measures For Reducing The Impact of Coronavirus Disease 2019 (COVID-19) 2020 [Act 829]...
3. How can I be declared bankrupt?

3. How can I be declared bankrupt?

You can only be declared bankrupt by a court order. There are two methods in which the court order may be granted i.e. either by a creditor's petition, or you may also voluntarily seek a court order to be made a bankrupt through a debtor's petition.
4. Is there a possibility that an individual be declared bankrupt without his knowledge?

4. Is there a possibility that an individual be declared bankrupt without his knowledge?

According to the legal provisions, all legal documents must be served personally to the debtor. For that purpose, creditor will refer to the debtor’s address that they have in their record. This depends on the debtor to constantly update their...
5. How do I check bankruptcy status?

5. How do I check bankruptcy status?

Search may be conducted through e-insolvency Portal at https://e-insolvensi.mdi.gov.my. A fee of RM10.00 will be charged for every search.
6. Can a person declare himself a bankrupt if he is unable to pay his debts?

6. Can a person declare himself a bankrupt if he is unable to pay his debts?

A person may make an application in court to declare himself a bankrupt as provided under section 7 Insolvency Act 1967 and rule 102(1) of Insolvency Rules 2017. That person is required to file a petition in a High Court stating his inability to...
7. Can the Department of Insolvency (MdI) make a person bankrupt?

7. Can the Department of Insolvency (MdI) make a person bankrupt?

MdI does not make people bankrupt. As mentioned above, a person is made bankrupt by a court order either by an application by a creditor, or by his own application. Once a bankruptcy order is made by the court, according to the law, the DGI has...
8. What should I do once I am a bankrupt?

8. What should I do once I am a bankrupt?

Once you have been adjudged bankrupt, you have to come to MdI branch that administer your case as soon as possible. The branch that is administering your case will be at the same state where the bankruptcy order was made. You are expected to give...
9. What are the responsibilities of a bankrupt?

9. What are the responsibilities of a bankrupt?

Upon receiving the bankruptcy order and throughout the bankruptcy period, a bankrupt shall give full cooperation with the DGI in the administration of his bankruptcy. The bankrupt must provide information on his assets, liabilities, financial...
10. What are the disqualifications of a bankrupt?

10. What are the disqualifications of a bankrupt?

After being given a Bankruptcy Order, the bankrupt is disqualified from:(a) holding the office of a Member of Parliament/Member of State Legislative Assembly;(b) holding public office (subject to the decision of Government Disciplinary Board;(c)...
11. Can a bankrupt make an application to DGI to reduce the amount of debt?

11. Can a bankrupt make an application to DGI to reduce the amount of debt?

The DGI has a duty to supervise the conduct of a debtor and to administer the debtor's estate. However, DGI has no power to reduce the amount of debt that has been filed by creditors. If a bankrupt intends to reduce the amount of debt for the...
12. Can a bankrupt make direct payment to the creditor to settle his debt?

12. Can a bankrupt make direct payment to the creditor to settle his debt?

A bankrupt is not allowed to make direct payment to the creditor. All payment has to be made to the DGI. The payment will be credited into the bankrupt’s estate account and will be distributed to the creditors who have filed in Proof of Debt and...
13. Can a bankrupt open a bank account or continue using his existing account?

13. Can a bankrupt open a bank account or continue using his existing account?

Once declared bankrupt, his existing account shall be deactivated and all transactions will be debarred. However, a bankrupt may open a new bank account or continue using his existing account for reasons such as crediting his salary or any other...
14. Can a bankrupt transfer his property?

14. Can a bankrupt transfer his property?

A bankrupt is not allowed to transfer his property to a third party once a Bankruptcy Order has been entered against him. As soon as a person is declared bankrupt, any of his property shall be automatically vested upon the DGI.
15. Whether a bankrupt is allowed to deal with his assets himself?

15. Whether a bankrupt is allowed to deal with his assets himself?

A bankrupt is not allowed to deal with his property as provided under section 8(1)(b) of the Insolvency Act 1967 because all of his assets and unsecured property will be vested to DGI. Therefore, any transactions and dealings of his properties can...
16. Since I’m a bankrupt, what will happen to my property?

16. Since I’m a bankrupt, what will happen to my property?

All the properties shall vest on the DGI except properties listed under seksyen 48(1)(a) of the Insolvency Act 1967. This includes the tools of his trade and the necessary wearing apparel and bedding and other like necessaries of himself, his wife...
17. Do my creditors have a right to seize my properties after I have been made a bankrupt?

17. Do my creditors have a right to seize my properties after I have been made a bankrupt?

Unsecured creditors can take no further action against a bankrupt to recover any debts incurred before being declared as a bankrupt. Unsecured creditors, have no power to deal with a bankrupt’s property and if any unsecured creditor intends to...
18. Can a bankrupt continue using his existing credit card?

18. Can a bankrupt continue using his existing credit card?

A bankrupt can only use his existing credit card up to the amount of RM1000.00. If the bankrupt wishes to continue using his credit card for an amount of more than RM1000.00, he must notify the issuing bank or finance company as to the status of...
19. What are the risks taken by financial institutions if they decide to give loan to a person who has already been made a bankrupt?

19. What are the risks taken by financial institutions if they decide to give loan to a person who has already been made a bankrupt?

If the lender is aware of the bankruptcy status of the borrower and decides to approve the loan nonetheless, the risk will be upon the lender. The lender must bear all risks in the event the borrower i.e. the bankrupt fails to service the loan.
20. Can a bankrupt travel overseas?

20. Can a bankrupt travel overseas?

A bankrupt may not travel overseas unless with the obtains written permission from the DGI or court allows him to do so. The application form with supporting documents must be sent to the Branch that administers his bankruptcy case. The application can be...
21. Can my parents who are bankrupts visit me in other country?

21. Can my parents who are bankrupts visit me in other country?

Travelling abroad is allowed only with the permission of the DGI who has been entrusted with the discretion by law. The primary purpose is to ensure all bankrupts give their utmost priority to payment of debts. Therefore, social visit is strongly...
22. How does my bankruptcy affect my current or future employment?

22. How does my bankruptcy affect my current or future employment?

Bankruptcy does not prevent you from working. When you are declared a bankrupt, it would not deny you of your right to continue your current job or to get a new job. However, a bankrupt should check whether there is any stipulation of such in his...
23. Since I need the permission of DGI to continue my existing job or for future employment, what steps shall I take to obtain such permission?

23. Since I need the permission of DGI to continue my existing job or for future employment, what steps shall I take to obtain such permission?

You must forward a written application to the DGI through any MdI branch where your case is being administered. Please take note that together with your letter, you must attach a copy of all relevant documents to support your application such as, a...
24. Can I remain as director of a company if I have been declared bankrupt?

24. Can I remain as director of a company if I have been declared bankrupt?

An undischarged bankrupt is disqualified from acting as a director of a company. If a bankrupt wishes to act as a director of a company, he must seek the approval of the DGI or grant of leave from the Court.It is also important to note that except...
25. What effect does bankruptcy have on the employment of a bankrupt in certain professions?

25. What effect does bankruptcy have on the employment of a bankrupt in certain professions?

A bankrupt may not engage in particular trades or professions where there may be certain restrictions imposed by professional associations or licensing authorities, such as lawyer, accountant, liquidator, quantity surveyor or act as a director of a...
26. What is the procedure for transfer of bankruptcy file?

26. What is the procedure for transfer of bankruptcy file?

The application for transfer of file must be made in writing and must be submitted to the respective branch of Malaysia Department of Insolvency (MdI) together with the supporting documents to prove bankrupt stays in the applied area. Once the...
27. What is the difference between an annulment of a Bankruptcy Order and a discharge from a Bankruptcy Order?

27. What is the difference between an annulment of a Bankruptcy Order and a discharge from a Bankruptcy Order?

An annulment refers to the termination of a Bankruptcy Order that was made against a bankrupt, as if he was never made bankrupt. On the other hand, discharge from a bankruptcy order relieves you from all of your debts provable in the bankruptcy...
28. Is there an automatic discharge for a bankrupt?

28. Is there an automatic discharge for a bankrupt?

Automatic discharge is only subject to the prerequisites as stipulated by the Act as follows: (a) Bankruptcy Notice (BN) issued only on and after 6 October 2017; (b) has already filed and submitted the statement of affairs under section 16 of Act...
29. How can a bankrupt be released from his bankruptcy status?

29. How can a bankrupt be released from his bankruptcy status?

There are 4 methods for a bankrupt to be discharged from his bankruptcy which are: (a) Annulment Order under section 105 of Insolvency Act 1967; This application is filed by the bankrupt once all debt owed debt has been paid in full by the bankrupt...