KUALA LUMPUR (Oct 9): The government will raise the bankruptcy threshold to RM150,000 from RM100,000, while expanding its second-chance policy to help more eligible individuals be discharged from bankruptcy.
The measure, announced under Budget 2027, comes at a time when the data from the Insolvency Department showed that new bankruptcy cases rose 16.9% year-on-year in the first seven months of 2026.
The department registered 4,301 cases between January and July, compared with 3,679 in the corresponding period of 2025. For the whole of last year, cases increased 13.4% to 6,776 from 5,977 in 2024.
There were a total of 29,812 bankruptcy registrations from 2021 to 2025. Including the first seven months of 2026, the figure rises to 34,113. Cases remaining under bankruptcy fell from 100,467 at end-2025 to 89,708 at end-July.
“Since 2023, the Madani government has helped more than 250,000 people escape the burden of bankruptcy,” Prime Minister Datuk Seri Anwar Ibrahim said during the budget tabling on Friday.
“To accelerate the discharge process, the compassionate second-chance policy will be expanded to primary caregivers of family members with disabilities, patients with chronic illnesses, senior citizens, gig workers and those without a fixed income,” he added.
Personal loans were the largest recorded cause of bankruptcy in January-July 2026, accounting for 1,653 cases or 38.4% of total. Business loans accounted for 757 cases, followed by housing loans at 574 and car hire purchase at 401.
Individuals aged 35 to 54 accounted for 2,932 cases, or 68.2% of new bankruptcies during those seven months, while 377 cases involved people aged 60 and above.
It is not known at this juncture how many individuals would come under Anwar's proposed RM150,000 threshold, as the department currently groups debts of RM100,000 to RM499,999 together — with 3,490 cases recorded under that category in January-July.
The government will also further strengthen automatic discharge under Section 33C of the Insolvency Act 1967, which allows eligible individuals to be discharged in as little as three years, said Anwar.
In January-July 2026, 135 cases were discharged under Section 33C, compared with 14,436 released under Section 33A — which allows the director general to issue certificates of discharge to those who have been bankrupt for at least five years at his discretion if the debt balance is less than RM50,000.
In 2025, 197 were discharged under Section 33C, while 26,501 were discharged under Section 33A.