Bankruptcy will be declared to an individual that:

          Has debt of more than RM 50,000 and cannot afford to pay it

          Failed to pay debts for 6 consecutive months

          Residing in Malaysia for more than 1 year during the indebted period

For a RM 10, you may verify your bankruptcy status at the Insolvency Malaysa headquarters in Putrajaya.

The insolvency process will be initiated for individuals who meet the circumstances and an order from Court will be issued. There are two methods an individual can be classified as bankrupt, namely through:

          Creditor’s petition: petition submitted by a creditor against a debtor who has debts more than Rm 50,000

          Debtor’s petition: an individual voluntarily declares himself bankrupt to protect themselves from creditors that they are unable to pay the debts.

Petitions that have been submitted are not allowed to be withdrawn without the permission of the Court.

Consequences of Bankruptcy on Company’s Directors

Under Section 38 (d) of the Insolvency Act 1967, a bankrupt without the permission of Director General of Insolvency (DGI) or the Court is not allowed to enter in or carry on business either alone or in partnership. Bankrupt also should not become a director of any company or otherwise directly or indirectly take part in the management of the company.

However, bankrupts can retain their position as a director of the company before disqualified by making an application to the DGI or the Court. In addition, bankrupt is prohibited from working in the companies owned by their spouses, children or relative and from running a sole proprietorship business.

Approaches to be released from bankruptcy status

1)      Revocation Order under Section 105 of the Insolvency Act 1967

A revocation order will be issued if the Court is satisfied with the revocation application. An application can be made when all of the debt claims are paid in full by the individual along with the fees and the cost of administration related to the case.


2)      Relief by the Court Order under Section 33 of the Insolvency Act 1967

A bankrupt can apply for a release of bankruptcy status from the Court. The court will examine the attitude and conduct of the applicant through the report of DGI to decide whether the applicant receive an absolute relief, conditional relief or the application is rejected.

3)      Relief with certificate of DGI under Section 33A of Insolvency act 1967

Application for a certificate of discharge can be submitted when the period of 5 years has expired from the date of bankruptcy issuance. The release of the certificate is subjected to the grounds of the application, the percentage of dividend payable, cooperation and attitude of the bankrupt throughout the administration of the case and the interests of the creditors,

DGI can release a bankrupt without nay objection when:

          Bankrupt for reasons as social guarantor

          Bankrupt is registered as a Person with Disabilities (OKU) under the Person with disabilities Act 2008

          Bankrupt has died

          Bankrupt has suffered from a serious illness that have been confirmed by a Government Medical Officer

4)      Automatic relief under Section 33 C of the Insolvency Act 1967

A bankrupt can apply for release from bankruptcy within 3 years of filing a Statement of Affairs with conditions applied. 

Reference link

Insolvency Act 1967