Decline in bankruptcies, thanks to the efforts of debt advice agencies and financial planners

PETALING JAYA: Debt counseling agencies and financial planners have been credited with reducing the number of bankruptcies in the country from a high of 16,482 in 2018 to just 4,491 in September.

According to the Malaysian Insolvency Department, 58% of those declared bankrupt from 2018 to September this year were between the ages of 25 and 44.

Another 0.5% were under 25, including six this year.

Personal loans have been the leading cause of bankruptcies among Malaysians since 2018, accounting for 42% of the total number of cases.

Next come 14.5% of bankruptcies due to vehicle purchases and 13.8% of business loans.

Financial planner Marshall Wong said that although half of recorded bankruptcies were among young people, data shows the number has decreased between 2018 and 2022, which is a positive reflection of young Malaysians taking action for their wellbeing. financial.

“We should give credit where it is due. The bankruptcy rate decreases more rapidly among those under 45 years of age. I believe it’s because young people are much smarter about managing their finances now than they were five years ago,” he said. the sun.

Wong said social media played a major role in spreading information and strategies for managing finances properly, especially through content posted by credible people who shared their views on money management. .

He said organizations such as the Credit Counseling and Debt Management Agency (AKPK), the Malaysian Financial Planning Association and the Malaysian Financial Planning Council should be credited for reducing the bankruptcy rate, as they have also helped promote financial literacy through events and campaigns, which have contributed to lower numbers.

Regarding the reasons for bankruptcies, Wong pointed out that personal loans topped the list because there are many reasons why borrowers take out such loans. Among the reasons could be medical bills, home renovation costs and child-raising costs.

“It should also be noted that there is a decline in bankruptcies due to credit card loans from 10.99% in 2018 to 3.99% in 2022. I think that is quite significant and a good sign in due to the high interest charged on credit cards (debt) compared to other loans,” Wong said.

An AKPK spokesman said the sun that Malaysians need to take control of their finances and emotional mindset to avoid negative consequences that could derail any financial planning.

AKPK offers financial education, counseling and debt management programs for those who have been declared bankrupt and others who seek advice before entering into financial arrangements.

Its debt management program helps borrowers by customizing a personalized debt repayment plan.

The plan provides for the rescheduling or restructuring of loans and finance such as home and personal loans or finance, hire purchase and outstanding credit or charge card balances that are owed to financial service providers under the Bank Negara Malaysia and other institutions including the National Higher Fund for Education, Tekun Nasional Berhad and cooperatives participating in the program.

From its inception in 2006 to September 2022, AKPK has helped over 1.2 million Malaysians through its financial advisory services.

AKPK has also helped 400,000 people through its debt management program and settled a total of RM2.2 billion in outstanding loans.

“Our financial education aims to develop more financially astute borrowers and consumers who would take control of their finances and, at the same time, promote a good payment and repayment culture through the wise use of credit, which is the best prevention against bankruptcy.

“The correct public perception of financial well-being is crucial for people to take advantage of all financial education and counseling opportunities offered by AKPK or other legitimate institutions,” the spokesperson said.