The Implication of Bankruptcy

We have known how a person can be declared as bankrupt. Therefore lets have a look on the implication of bankruptcy. According to the Malaysia Department of Insolvency (MDI), consequences that an insolvent may encountered once they had been declared as bankrupt are as follows:

1. May only use their credit card not exceeding RM1,000. To use more than RM1,000 will require them to inform the card issuer regarding their bankruptcy status in order to enable them to decide.
2. Not allowed for direct payment of debt to the creditor. Instead, a bankrupt need to make payment through Director General of MDI (DGI) whereby the payment will then credited into the estate account and distributed to the creditors who have filed in Proof of Debt.
3. All savings account of the bankrupt will be closed and all transactions will be blocked. Nevertheless, a bankrupt may open a new account or activate their existing account for the purpose of salary. Prior to this an approval from the DGI are needed.
4. Not allowed for transfer of property to third party once an Adjudication Order had been made against them. All properties are automatically vested upon DGI.
5. They are not permissible to leave the country unless there are wirtten approval from the DGI or court. 
6. They are disqualified from acting as director to a company and this are in accordance with the Companies Act. If a bankrupt wants to remain their position as a director, application need to be made and submitted to the DGI or court and it is subject to either of this party’s approval.
7. They are also disqualified from being a Parliamentary Member, holding a post in any statutory body or registered cooperatives, practicing certain profession, maintaining any action without the sanction of DGI other than an action for damages in respect of an injury to a person and receiving pension as well as gratuity. 
8. Not permitted to work in a company owned by their spouse, children, relatives or runs a sole proprietorships, unless there are approval from DGI and court.
9. They are not prevented from working or attaining new job. However, this is subject to the terms and conditions stated in a contract of employment. 

For further information, please visit MDI's website at this link:
www.insolvensi.gov.my