Look before you leap into debts

PETALING JAYA: The public should seek advice before making new financial commitments to avoid financial distress later, says the Credit Counselling and Debt Management Agency (AKPK).

Its head of corporate communications Sazlin Zainal Abidin said society needed to stop having the view that people should seek help from institutions like AKPK only when they were already drowning in debt.

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“We observe that people come to AKPK when they are already in great financial distress; some when they are about to be declared bankrupt.

“This should not be the way. The public should approach AKPK even prior to taking any new loans. Then we will help them to look at their overall financial situation and advise them accordingly.

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“Our services to individuals are free of charge and without the use of any third-party agents,” she told The Star.

Sazlin said 85% of those who reached the end of AKPK’s Debt Management Programme (DMP) successfully regained control of their finances.

“DMP has a maximum tenure of 10 years, so of about 358,000 of those who are in the programme, 80,800 have reached the end stage of the programme, and from that number, 85% of them have settled their debts.

“About 31% of the 80,800 have opted to withdraw from the programme as they feel that their finances are stable enough to make repayments directly to the banks, so they decided to discontinue the programme with us,” she added.

Most of the DMP applicants are aged between 30 and 40 (41.5%), followed by those between 40 and 50 (28.3%), 20 to 30 years old (13.5%) and 50 to 60 years old (13%).

The common reasons that lead to people participating in this programme are: having to cope with the high cost of living (36.9%); poor financial planning (36%); failure or slowdown in business activities (11.6%); loss of job, retrenchment or loss of breadwinner (8.9%); high medical expenses (5.3%); and others (1.3%).

However, there is a small percentage of those who were unable to complete the programme due to job disruption, especially during the pandemic.

Since its inception in 2006 until February this year, more than 1.2 million individuals have received AKPK’s advisory services.

A total of RM2.1bil in outstanding debts had been settled since then.

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