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2 new groups qualify for bankruptcy discharge after amendment to Insolvency Act

The two categories are individuals with mental illnesses certified by government psychiatrists and those who are over 70 years old.

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Minister in the Prime Minister’s Department (Law and Institutional Reform), Azalina Othman Said. Photo: Bernama
Minister in the Prime Minister’s Department (Law and Institutional Reform), Azalina Othman Said. Photo: Bernama

The amendment to the Insolvency Act 1967 will allow two more categories of bankrupt individuals to qualify for discharge through the director-general of insolvency's certificate of discharge without going through debtors'objections, Minister in Prime Minister's Department Azalina Othman said.

The amendment involves Article 8, Subsection 33B (2A) with the inclusion of the two categories, individuals who cannot manage themselves due to mental illness confirmed by a government hospital psychiatric expert and individuals aged 70 and above based on the opinion and consideration of the director general, as Paragraphs (e) and (f).

"The amendment is in line with the government's intention to preserve the welfare of bankrupts. They no longer have the means to cooperate and contribute to the bankruptcy administration.

"The factor of public interest also needs to be considered as bankruptcy involves public funds that need to be optimised," she said when tabling the Insolvency (Amendment) Bill 2023 at the Dewan Rakyat yesterday.

She added that Article 15 of the bill has a provision on the use of Paragraph 33B(2A) (e) and (f) for bankruptcy cases managed before the amendment is effective retrospectively.
Therefore, after the amendment is passed, 19,913 bankrupts aged 70 and above qualify to be considered for discharge through the director general's certificate if they fulfil the set conditions, Azalina said.

She added that the suggested amendment for Section 33C Article 8 of the bill is aimed to assist bankrupt individuals to be discharged automatically in a short period, between three to five years, by lightening the payment conditions without neglecting the interests of debtors.

The amendment will ensure that bankruptcy administration can be conducted effectively taking into consideration the interests of the public, bankrupts and debtors, she said.

Key suggested amendments for Section 33C include the replacement of conditions of targeted amount settlement for acknowledging debts with payment conditions determined by the director-general based on the bankrupt’s financial capabilities.

"Also, the provision of new powers for the director general to suspend automatic discharge for a period not more than two years if the bankrupt does not fulfil his obligations under the act, as well as the authority to ask the bankrupt individual to provide further information on income, expected income and property," she added.

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