What is the new RM200,000 debt limit for automatic bankruptcy discharge?

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Expansion of Automatic Bankruptcy Discharge to RM200,000 Debt Limit Announced

The automatic discharge of bankrupt individuals will be expanded in the upcoming year to include those with debts up to RM200,000, as announced under Budget 2024. This measure represents an extension of the existing "second chance policy," which was previously implemented to automatically discharge bankrupts under the age of 40 with debts not exceeding RM50,000, following the enactment of the Insolvency (Amendment) Act 2023.
Increased Debt Threshold for Automatic Discharge

As part of Budget 2024, the government intends to raise the debt ceiling for automatic bankruptcy discharge to RM200,000. This policy initiative aims to provide a broader group of individuals facing financial distress with an opportunity for a fresh start and to re-engage with the economy.
Implementation of the Second Chance Policy

The current "second chance policy," established through the Insolvency (Amendment) Act 2023, has already facilitated the automatic discharge of bankrupt individuals who met specific criteria. Prior to this expansion, the policy focused on those under 40 years old with debts under RM50,000. As of July 2023, nearly 14,000 bankruptcy cases involving debts below RM50,000 have been discharged.
Amendments to the Insolvency Act 1967

The relevant amendments to the Insolvency Act 1967 officially took effect on October 6. A key provision within these amendments, specifically Section 33C, is designed to enable bankrupt individuals to be automatically discharged from bankruptcy within a timeframe of three to five years from the date they submit a declaration of assets. These amendments are being applied retrospectively to bankruptcy cases administered before the new Act came into force.

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What is the new RM200,000 debt limit for automatic bankruptcy discharge?

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