GEORGE TOWN: Everything was going smoothly for businessman Ameer when he started a food and beverage business with a few friends in Petaling Jaya in 2018.
But in a space of around two years, his whole world suddenly came crashing down when the Covid-19 pandemic hit.
“We started a small business selling pasta. In the beginning, we were doing well and business flourished.
“I made a bold decision and decided to open a shop in 2020 to sell our food.
“I rented a place in Bangsar, which is known for its high rental and hired an interior designer to make up the place,” said the 30-year-old.
Soon after the pandemic hit his business came to a standstill. He was then declared bankrupt with a massive debt waiting for him.
“Since I was the founder of the business, the loans were registered under my name, and I was overspending on my personal account as well as my business account.
“I did not foresee the movement control order and had already borrowed money from the bank for renovation works.
“I also did not plan my finances well and was living on credit. I had bought a new car and had to pay my student loans on top of the outstanding credit card payment. Yet, I was spending more than I earned.
“One day, I received a letter from the court over the failure to service the loan balance of more than RM70,000. Since I did not have a fixed income, I could not pay back my debts.
“The bank subsequently sued me for bankruptcy and I was then adjudicated bankrupt. I was only 28 years old back then,” he said.
Ameer added that he could only depend on his family during the past years to survive.
“The bankruptcy threshold was only RM50,000 and I owed my creditor more than RM70,000.
“I was not entitled to any loans and grants due to my status as a bankrupt.
“With the new amendment, I would not have been declared a bankrupt. Life would have been easier for me.
“It would have given me a breathing space and I could have handled my cash flow issue.”
MCA Youth chief Datuk Nicole Wong urged youths to be frugal and wise when spending money.
She said it was worrying that youths as young as 25 years old were already declared bankrupt, advising them to learn not to overspend and live within their means.
“Youths nowadays should make due consideration before spending and avoid wasting money.
“The government should also put more effort in publicity and road shows to educate the young generation on how to spend wisely, and organise workshops that engage them on how to generate more income,” she said.
Consumers Association of Penang president Mohideen Abdul Kader, in a statement, expressed his concern over the January to April 2022 bankruptcy statistics that were revealed recently.
Addressing it as just the “tip of the iceberg”, Mohideen pointed out that the Insolvency Act 2020 (Amendment) took effect on Sept 1, 2021.
“With the amendment, a creditor may file for bankruptcy action against the debtor if the debt amounts to RM100,000.
“The bankruptcy threshold was RM50,000 before the amendment. It means that if a debt does not exceed RM100,000, the creditor is unable to file for a bankruptcy action.
“It is difficult to determine the number of debtors who owe amounts anywhere less than RM100,000 unless they reach out to agencies such as the Credit Counselling and Debt Management (CCDM) Agency, which is under the purview of Bank Negara Malaysia.
“As it is commonly known, a debt of even a few thousand ringgit is difficult to manage because a loan default will result in mounting interest, and in times of economic uncertainties, it is even tougher,” he said.
In July, Minister in the Prime Minister’s Department (Parliament and Law) Datuk Seri DrWan Junaidi Tuanku Jaafar said there were 239 bankruptcy cases involving those aged 25 and below from 2018 to May this year.
For the same period, there were 9,913 bankruptcy cases involving those aged 25 to 34, and 17,213 cases involving those between 35 and 44 years.
On June 23, the Insolvency Department revealed that on average, 18 people were declared bankrupt every day in the first five months of this year.
