PETALING JAYA: There must be a proper check and balance to ensure borrowers do not avoid settling debts if insolvency laws are amended, said Datuk Seri Michael Chong.
The MCA Public Services and Complaints Department head said the government should rethink its proposal to amend bankruptcy laws and lower the threshold.
“There needs to be a check and balance because there are worries that lowering of the threshold will lead to more people being declared as bankrupts,” he said yesterday.
Based on the data from the Insolvency Department, the number of bankrupts has been gradually decreasing – 16,482 in 2018, 12,051 (2019), 8,351 (2020), 6,554 (2021) to 3,604 as of July this year.
The drop in the number of insolvents was due to amendments to the Insolvency Act in 2017, which saw the bankruptcy threshold raised from RM30,000 to RM50,000 and in 2020 when it was raised again from RM50,000 to RM100,000.
The government plans to amend the insolvency laws which includes reviewing the threshold and putting in place a mechanism for the automatic lifting of the bankruptcy status.
Chong said there was a concern of debtors exploiting the leeway given when the laws are amended.
“There will be those who will take advantage of the leeway and find a way out of repaying their loans.
“We must be fair not only to the borrowers but also those who loan out money to them,” he said.
If the amendments are carried out, Chong suggested that a board be set up to scrutinise applications made by those seeking to lift their bankruptcy status.
