This article first appeared in The Edge Malaysia Weekly on April 27, 2026 - May 3, 2026

By raising the bankruptcy threshold from RM50,000 to RM200,000, the government has probably spared many individuals from being declared bankrupt.

Last week, Economy Minister Akmal Nasrullah Mohd Nasir also said Putrajaya is looking at providing a “second chance” to four target groups, namely single parents, micro-business operators, victims of financial scams and victims of abandoned housing projects. Individuals who became bankrupt due to misfortune rather than poor financial management should get a second chance, he said.

He did not say how many of the 31,517 bankruptcy cases from 2021 to March 2026 were due to misfortune not of their own doing.

Official data shows that 14,582 cases, or 46%, stemmed from personal debt pressures. Alarmingly, 4,704 cases — 15% of the total — involved individuals aged 34 and below.

Apart from raising financial literacy to enable better spending habits, policymakers may need to see whether unsecured loans are being given too freely to individuals who spend beyond their means. The Ministry of Finance, for instance, recently reminded on social media that while Hari Raya celebrations may be once-a-year occasions, one should still be careful to not spend unnecessarily.

Raising the bankruptcy threshold may reduce the number of cases and spare individuals from being declared bankrupt, but many will still face a debt spiral that prevents them from building savings for a rainy day or old age. If debt is being accumulated due to day-to-day cost of living pressures rather than reckless overspending, the longer-term solution should be upskilling for better paying jobs. Greater care is needed in deciding when to grant that second chance.

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