PETALING JAYA: In extending a helping hand to spouses, relatives or friends in need of money, they willingly and trustingly sign up as guarantors.
However, many of these guarantors later end up in a tight situation when the loans are not repaid, leading to some even being declared bankrupt or, worse, a few developing suicidal tendencies.
“On an average, in a week, we get about 10 people walking in to see us. They are guarantors seeking help,” said Consumer and Borrower Settlement Association of Malaysia president Rosland Mohd Arif.
Some guarantors, said Rosland, were not even aware of the actual amount they supposedly owed.
“They just keep on paying for years because some of these loans were ‘sold’ to debt collectors, but nothing is ever given in black and white.
“For me, my number one rule is always ask for everything in black and white. Always read the documents and never sign anything blindly.
“Also, at no point is anyone allowed to enter your house without your permission. Whether they be bank representatives or debt collectors, they must give a notice in writing,” he said.
As at February this year, there were 268,744 bankruptcy cases administered by the Insolvency Department.
Of this number, 634 cases involved individuals who had been declared bankrupt for being corporate guarantors while 17 cases were social guarantors, the department said.
Many people who acted as guarantors, said Rosland, were often tricked by debt collectors or credit control officers.
He said that generally, most Malaysians lack legal knowledge on matters related to debt settlement and repayments.
“Many Malaysians are not knowledgeable on banking matters and loans, and the laws that are in place such as the Limitation Act, Insolvency Act and Personal Data Protection Act,” said Rosland, whose non-governmental group was set up in 2013 to help those dealing with bankruptcy, house auctions, vehicle repossession, bad debts and harassment issues with debt collectors.
Referring to his years of dealing with guarantors and hearing their anguish, their struggles and the horrors they go through, he said he believes that some develop a suicidal tendency.
“They are unable to handle the pressure of having to deal with the debts not caused by them personally,” he added.
Following an announcement by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of the revised Budget 2023, bankrupts are now given a second chance to rebuild their lives, with the government having taken several initiatives.
These include bankruptcies with debts proved not to have exceeded RM50,000 and those who satisfy the required conditions being eligible for a discharge by the Certificate of Director of Insolvency (DGI), starting March 1.
Certain provisions in the Insolvency Act would also be amended to improve the administration of bankruptcy cases, the department told The Star.
“A bankrupt is eligible for a discharge by the certificate of the DGI if his proven debt in the bankruptcy does not exceed RM50,000.
“However, to determine whether the debt amount is below RM50,000, this would be on a case-by-case basis.
“For example, the amount will be determined after deduction of any dividends payable from the bankrupt’s estate account or after realising the bankrupt’s properties in order to pay their proven debts,” said the department, adding that it is still too early to provide the number of such cases.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said had said that the amendments to the Insolvency Act would improve the administration and management of the country’s bankruptcy system.
She said the government estimated that at least 130,000 people of the total 260,000 bankruptcy cases recorded as of early this year would be freed from bankruptcy with the passing of the amendments.
