KUALA LUMPUR: Sixteen people were declared bankrupt each day last year, the Insolvency Department revealed.
They mostly comprised those who defaulted in servicing their personal and business loans.
Despite the sizeable number of bankruptcies with 5,695 cases last year, the total was nevertheless lower than the 6,554 cases recorded in 2021.
The reduction, the department said, was due to an amendment to the Insolvency Act on Sept 20, 2020, which saw the bankruptcy threshold raised from RM50,000 to RM100,000.
Bankruptcies in the country, it said, had steadily reduced from more than 16,000 cases per year in 2018 to almost 6,000 cases last year.
"The total number of bankruptcy cases administered for the period of 2018 to December 2022 was 49,133.
"A total of 16 petitions were filed every day in 2022 and 16 cases registered daily in the same year," the department said.
Almost 40 per cent of the cases involved those aged 35 to 44, while 29 per cent of the cases reported involved those aged 45 to 54.
Almost half of the cases registered were due to personal loans, while 22 per cent of the cases were due to business loans.
The statistics also indicated that almost 70 per cent, or 3,881 of those declared as bankrupt, had
a debt threshold of between RM100,000 and RM499,000.
The number increased significantly from 1,572 cases in the previous year.
Commenting on the data, financial expert Professor Dr Mohamad Fazli Sabri said the reopening of businesses after the Covid-19 pandemic might have contributed to the improvement in Malaysia's number of bankruptcy cases.
He, however, expressed concern over the high number of bankruptcies with debt of RM100,000 to RM499,000.
"The data shows promising progress, probably because we have started to resume our businesses, and also maybe this could be the result of our government's intervention and financial programmes.
"But I am still quite worried about the numbers of those with debts of RM100,000 to RM499,000.
"I think we need to know who these people are and see how we can intervene to help them manage their debts," said Fazli, who is Universiti Putra Malaysia's Faculty of Human Ecology dean.
He said Malaysians should avoid taking out new loans and carefully assess their ability to service their existing loans should there be a dire need for a new one.
"They need to make sure that their service ratio or payment commitment does not exceed 30 per cent, or one third, of their income.
"Avoid Ah Long (loan sharks), illegal money lenders and get-rich-quick schemes.
"Instead, seek advice from experts, such as certified financial planners and agencies, such as the Credit Counselling and Debt Management Agency."