Chief executive officer, Azaddin Ngah Tasir said the new service would provide debtors an opportunity to negotiate a debt repayment plan with creditors and avoid bankruptcy.
“This rescue mechanism acts as a ‘second chance’ for borrowers to regain control of their finances, without placing any restriction on them, the way bankruptcy does,” he told reporters at the VA Awareness Briefing here, today.
Azaddin said with the VA, debtors would have the advantage of a moratorium of legal action and the process would be legally binding, unlike its Debt Management Programme (DMP).
The service would also make it more cost-efficient for credit providers as an alternative collection source, and they would be assured of the debt repayment.
He said under the VA, the court would issue a 90-day interim order, during which AKPK would help the debtor prepare a debt repayment structure.
He added that AKPK would charge the debtor up to five per cent of the outstanding debt for its service.
“We hope the VA will create a mutual win-win situation for all parties and reduce bankruptcy figures in the country,” said Azaddin.
The VA scheme was introduced under the revised Insolvency Act 1967 which came into force on Oct 6, 2017.
Meanwhile, the Malaysian Department of Insolvency Director-General, Datuk Abdul Rahman Putra Taha said the rescue mechanism was a necessary feature in all bankruptcy regimes.
“This is the transition towards self-resolution to promote responsible debt settlement and individual debtor rehabilitation,” he added.
He said there was a need to constantly revise the insolvency law to ensure it remained relevant to support Malaysia’s growth.
“We are also hoping to change the people’s mindset regarding insolvency that a bankrupt is not a bankrupt for life,” he added.
From 2013-2017, there were 100,610 bankruptcy cases, 34.4 %of which were from the 34-44 age group. Men accounted for over 69% of the bankruptcy cases during the period. - Bernama