Insolvency department director-general Ishak Bakri said the majority of bankruptcies stemmed from substantial personal loan liabilities, reflecting that salaried employees are disproportionately vulnerable to insolvency.

“This finding is supported by the department’s state-level data and financial literacy outreach programmes.

“Individuals with fixed incomes, such as teachers, are often approved for loans more readily, but face risk without prudent financial management,” Bernama reported him as saying in a financial literacy programme at Politeknik Merlimau Melaka today.

Separately, Ishak said 200,000 individuals were successfully discharged from bankruptcy last year, surpassing the government’s target key performance indicator.

He said this was the result of a fundamental shift in the national insolvency system, which now emphasised welfare and rehabilitation over punishment.

“A 2023 amendment to the Insolvency Act empowers the director-general to grant a discharge without a court order, provided that applicants meet specific criteria under this policy,” he said.

Those eligible for the policy include individuals over 70 years of age, those in prolonged bankruptcy and those formally diagnosed with mental health conditions.

“Malaysia is a pioneer in recognising mental health as grounds for discharge. A confidential medical certification can lead to an immediate release,” Ishak said.

He said his department also planned to introduce new fast-track criteria for single mothers, victims of financial fraud and micro-borrowers.