We often hear about a business or a public official going bankrupt, but did you know that you can go bankrupt too?
You can easily go bankrupt without your knowledge just because your legal documents were sent to an old address or you failed to appear in court on the day of the hearing, you refused to accept or open legal documents served at your address or you did not read the local newspaper when service was made by substitute delivery. So you must always be vigilant.
What is bankruptcy?
The term bankruptcy refers to a proceeding in which a debtor is declared insolvent according to a court order at the request of the creditor or the debtor. All unsecured assets of the bankrupt are transferred to the Director-General of Insolvency (DGI) and the DGI is responsible for the sale of all assets. The proceeds of the sale are distributed among the creditors who have filed a proof of their debts and whose debts have been acknowledged by the DGI.
How can I be declared bankrupt?
You can only be declared bankrupt by a court order. There are two ways in which the court order can be granted, either by a petition from a creditor or you can also voluntarily seek a court order for bankruptcy by a petition from the debtor.
However, you cannot simply go bankrupt. The creditor may initiate bankruptcy proceedings against the debtor if the debt is more than RM50,000.
What should I do once I'm declared bankrupt?
Once you have been declared insolvent, you must contact the Malaysian Department of Insolvency (MDI) branch administering your case as soon as possible. The branch office that administers your case is located in the same state where the bankruptcy order was issued.
You will be expected to cooperate fully and disclose all details of your income to the bankruptcy officer. The officer will assist you in filling out all relevant forms.
How do I check my status?
You can check your insolvency status by logging into the e-Insolvency portal at https://e-insolvensi.mdi.gov.my. There will be a fee of RM10.00 for each search.