Malaysia will raise the bankruptcy threshold from RM100,000 to RM150,000 starting in 2027.
Prime Minister and Finance Minister Anwar Ibrahim announced the change during the tabling of Budget 2027 on 9 October.
The higher threshold will increase the minimum debt amount required for creditors to initiate bankruptcy proceedings against an individual.
However, the change does not cancel existing debts or prevent creditors from pursuing other debt recovery measures.
More Malaysians to Qualify for Bankruptcy Discharge
The government will also expand its Second Chance Policy to help more people obtain a discharge from bankruptcy.
The expanded policy will extend support to caregivers of family members with disabilities, people with chronic illnesses, senior citizens, gig workers and those with irregular incomes.
The government also plans to strengthen the existing automatic discharge mechanism under Section 33C of the Insolvency Act 1967 to speed up the discharge of eligible bankrupt individuals.
Under the existing provision, eligible individuals may be discharged three years after submitting their statement of affairs, subject to meeting payment and reporting requirements.
Anwar said government initiatives have helped more than 250,000 Malaysians exit bankruptcy since 2023.
Featured image: Edited by Fintech News Malaysia, based on image by ababilhot via Magnific
