He revealed that self-declared bankruptcy cases surged to 330 last year compared with 181 recorded in 2023 and 116 in 2022, Bernama reported.
Bakri said it is a sign that many people are struggling with severe financial difficulties.
“We’re seeing a rise in individuals declaring bankruptcy because they feel they cannot repay their debts.
“Some borrowers may also choose this route to reduce their financial burden. For instance, if their monthly debt repayment is RM2,000, they might expect it to drop to just RM200 after being declared bankrupt,” he was quoted as saying.
He said that in recent years, more people have opted to declare themselves bankrupt through a debtor’s petition, a legal process filed in court to protect themselves from excessive creditor claims.
The department is taking this rising trend seriously and is reviewing the debtor’s petition process to prevent potential misuse, as it does not have a set debt threshold.
“With a debtor’s petition, an individual can apply for a court order to declare bankruptcy without any minimum debt threshold. They simply need to complete the required documents and pay a deposit.
“In contrast, a creditor’s petition only applies when the debt exceeds RM100,000, allowing creditors to initiate bankruptcy proceedings,” he told Bernama.
He also cautioned that the Second Chance Policy, introduced by the government to help individuals regain financial stability, could be exploited if self-declared bankruptcies continue unchecked.
“I’m concerned that some individuals may take advantage of the system. They could file a debtor’s petition, declare bankruptcy, and then, knowing they can be discharged within three years by making minimal payments, use the Second Chance Policy to clear their status,” he said.
The Second Chance Policy is an initiative by the unity government to help individuals with small-scale debts to secure a bankruptcy discharge under specific conditions.
Bakri said 176,851 bankruptcy discharges were granted under this policy between March 2023 and December 2024, surpassing the initial target of 130,000 cases.
“The department is now working on extending the Second Chance Policy to bankrupt companies. We are identifying eligible businesses to be included in the initiative,” he said.
Previously, Prime Minister Anwar Ibrahim announced that the government would expand the Second Chance Policy to assist bankrupt companies in recovering from financial distress.