Credit Card and Bankruptcy in Malaysia

According to the Malaysian law, you can become bankrupt when the outstanding sum involved is RM30000 (previously it was RM10000) or more with a default period of six months or more. Defaulting on credit card payment is among one of the ways to be bankrupt.

Among others, being bankrupt, you cannot


• Hold any public office without the approval of the Director-General of Insolvency Malaysia (DGI)
• Pursue and court action without the DGI’s permission
• Leave the country without the court’s or DGI’s permission. The DGI will hold your passport.
• Be a company director or carry out your own business or be involved in the management of a company without the court’s or the DGI’s approval.
• Be involved in the management of a company or be an employee of a company that is owned by your spouse or close relatives and their spouses
• Be a committee member of any registered body.
• Open a bank account without the approval of the DGI


A bankrupt can work but he or she has to leave a certain percentage of his or her income to the DGI to repay debts. A person can be discharged from "bankruptcy" when he or she has settled debts in full.

The sensible way to avoid being bankrupt is to pay your credit card bills fully and promptly every month upon receiving their statements.

The following is an extract from MyPF:

Malaysia Bankruptcy Law Updates

Malaysia’s bankruptcy laws receive an update in March 2017. Here are the key updates.

• The minimum to be declared bankrupt is raised to RM50,000 (from RM30,000).
• Social guarantors can no longer be declared bankrupt. Social guarantors provide guarantees to loans such as educational loans, hire-purchase loans, and housing loans which they are not beneficiaries of.
• Automatic discharge of bankruptcy after three years, subject to good behavior including making payments towards your debt and submitting a full accounting of your monies and properties (previously 5 years and subject to Director General of Insolvency’s approval).
• A debtor may propose a voluntary arrangement to his creditors any time before he is adjudged bankrupt.
• A bankruptcy notice needs to be served personally to a debtor.

Things to Consider before Getting a Credit Card

Do not think that when you have a credit card your lifestyle will change for the better or you can spend freely. In fact, when you don’t manage your credit card with care you will end up as a bankrupt 

Consider the following before acquiring a credit card:


1. For convenience and not for credit: Don’t think that you can increase your spending power by just paying the minimum amount and roll the balance to the following month and continue to spend in this way. A credit card is for convenience and not to obtain credit or to incur debt. The outstanding amount has to be settled fully and promptly when you receive the monthly statements

2. Take advantage of credit card benefits: You can take advantage of your credit card to reduce your normal expenses such as petrol and other grocery items. For certain cards, you are given rebates for the purchase of these items.

3. Simplify your life: You can arrange with the card issuer to pay for all your utility bills and insurance premium. Life is easier when you don’t have to issue too many cheques and go to too many places to settle your monthly bills and commitments

4. Self-discipline: Are you able to control your spending according to your budget?
Are you not an impulsive spender? You can keep a credit card if you follow closely your monthly spending pattern with or without a card.

5. Track your spending: You can use your credit card as a tracking tool to monitor your spending. Review the monthly statements to trim unnecessary expenses.


When used correctly, a credit card is an asset and not a liability.

Central Credit Reference Information System of Malaysia

Central Credit Reference Information System

There was a story in The Star telling that an applicant who changed her mind and never collected the credit card. However, RM5 was debited into the account. Because the card was neither collected nor used, it may be presumed that no statements were sent.

As often happens, a surprise awaited the individual concerned when her application for a housing loan at another bank was rejected because she had been “blacklisted” on account of the outstanding debt of RM5 that had been reported to the Central Credit Reference Information System (CCRIS).

According to the article, Credit Worthiness, there is no such thing in law as a blacklist described or defined anywhere or in any document. It is a word that has come to refer to arrangements made by individuals, groups, or even institutions to create an “alert” system.

However, through the ignorance of some of the officers of lending institutions or institutions granting credit, and lack of appreciation of the role of such an alert system, its usefulness is not really appreciated and instead results in inconvenience. The purpose of such a list is not to condemn an individual just because his or her name is on it.

Its real purpose is to alert the organization to which a loan or other application is made as to some relevant aspects of the individual or organization’s past dealings with a view to a possible critical examination. The existence of such a list is to assist in the process of credit evaluation. This can only be done by asking the person concerned for an explanation with regard to the nature of the list.

The individual is put through unnecessary inconvenience for which there is no real remedy. This is because the repository of the information will merely claim to store and making the available date. The lending institution will say that at that stage, there is no contractual relationship that can be the basis of wrongdoing.

The writer, Bhag Singh, recommends that given such a scenario, the welfare of the individual can only be protected by having institutions with better-trained officers and regulatory bodies that can exercise greater vigilance to safeguard the interest of the public.

Related post:

Credit Report

Credit Report

Your credit report contains your credit history and your personal information. Your credit record includes your credit accounts, loans, bankruptcies, and late payments. Upon receiving an application for a loan or credit from you, financial institutions can obtain your credit report to assess your credit-worthiness before approving your application. It is very important that your credit report is updated before making credit applications.

In Malaysia, you can obtain your credit report from the Credit Bureau of Bank Negara Malaysia. It is housed in a computerized database system known as the Central Credit Reference Information System (CCRIS).

In the past, the Credit Bureau of Bank Negara Malaysia was empowered to disclose credit information only to financial institutions. With effect from March 2002, an individual can request for his own credit record. However, you can only apply for a credit report once every 12 months. It is free of charge.

When you wish to ask for your credit report you can go to

http://www.creditbureau.bnm.gov.my and download Form CBS 01 (Credit Report Request Form) from Bank Negara Malaysia or Central Bank of Malaysia.

If you dispute the information reported by the financial institutions in your credit report you can fill up another form, Request for Data Review. The Credit Bureau will investigate and notify the financial institution that had provided the disputed information together with all relevant data. The investigation and remedial process will normally take about a month to be completed. You will be notified of the outcome of the investigation. In the event that the disputed information is confirmed accurate, you are advised to refer the matter to the respective financial institution.

Merchants in Malaysia are Warned about Credit Card Transactions

Merchant Agreement

According to a recent report in the New Straits Times, there are unscrupulous traders who transfer the two percent surcharge, which they are supposed to shoulder to provide credit card payment services,  to their clients. Second Finance Minister Datuk Sri Ahmad Husni Hanadzlah says credit card users have been advised to report to the authorities if any merchant transfers the two percent surcharge on any transaction to them. He adds that the best way is for buyers to report such cases so that quick action can be taken.

Subsequently, a reader sends a letter to the editor of the newspaper asking about the appropriate agency to make a report. I think what the reader can do is to approach the bank in which the merchant has entered into an agreement to accept credit card payments. Inform the bank that the merchant has violated the merchant agreement. He will be able to identify the bank by looking at the charge slip. If he is unable to resolve the issue he should next approach The Financial Mediation Bureau to settle the dispute with documentary evidence.

Credit Card Disputes – Get Free and Professional Mediation

Source:http://empowerla.org/city-attorneys-dispute-resolution-program/


Do you have a dispute with your credit card issuer and you are unable to resolve the issue? Look no further. Go to The Financial Mediation Bureau (Malaysia) for an amicable settlement.

The Financial Mediation Bureau is an independent body set up to help settle disputes between you and your financial services providers who are its members. It provides you with a free, fast, convenient, and efficient avenue to refer your disputes for resolution as an alternative to the courts.

The financial Mediation Bureau will assist you in other financial issues and not just credit card related. Among others, disputes relating to the following can be referred to FMB:

Personal and housing loans

ATM

Cash deposit machine

Hire purchase

Savings and current accounts

Fixed deposit

Internet banking

Insurance

Go to http://www.fmb.org.my to find out more about the bureau.