Understanding Bankruptcy Searches in Malaysia

Bankruptcy can be a daunting reality for individuals and businesses alike, particularly in Malaysia where financial responsibilities are rigorously enforced. When debts mount and financial obligations cannot be met, individuals may find themselves facing bankruptcy proceedings. Therefore, to ascertain whether someone has declared bankruptcy, individuals can conduct a bankruptcy search on themselves or others. This step is crucial for understanding financial liabilities and complying with Malaysia's stringent regulatory environment.

Causes and Criteria for Bankruptcy in Malaysia

In Malaysia, bankruptcy often arises from the inability to settle debts promptly. This can encompass various types of loans such as housing loans, vehicle loans, personal loans, and business loans. Moreover, individuals can be declared bankrupt if their debts exceed RM100,000 and they fail to make debt repayments for six consecutive months.

 

Consequences of Bankruptcy

Once declared bankrupt, individuals will face significant consequences:

• Asset Administration:
  • All personal assets, including houses and vehicles, are placed under the supervision of the Director-General of Insolvency (DGI). These assets may be liquidated to settle outstanding debts owed to creditors.
• Financial Restrictions:
  • Bankrupt individuals experience severe financial restrictions. Their bank accounts are frozen, with a minimal credit limit imposed not exceeding RM1,000. Moreover, travel abroad necessitates written permission from the DGI.
• Professional Limitations:
  • Certain professions are off-limits to bankrupt individuals, including roles in banking, accounting, medicine, and law. This restriction extends to directorial positions in companies, severely limiting career opportunities post-bankruptcy.
• Business Ownership:
  • Bankrupt individuals are barred from owning or operating businesses. This prohibition is part of the blacklisting process that restricts entrepreneurial activities until debts are satisfactorily resolved.

 

Conducting a Bankruptcy Search

There are several compelling reasons why conducting bankruptcy searches is essential. Given the stringent consequences of bankruptcy in Malaysia, it is prudent for various stakeholders to engage in bankruptcy searches. These are a few purposes of bankruptcy search:

• Financial Transactions:
  • A bankruptcy search is done to ensure the financial stability of potential partners or borrowers before entering into significant financial agreements. 
• Employment Screening:
  • Employers utilize bankruptcy searches during background checks to evaluate the financial responsibility of prospective employees, particularly for roles involving financial management. Additionally, professions such as lawyers, doctors, accountants, business directors, and surveyors require individuals who are not under bankruptcy status due to the nature of their responsibilities 
• Legal Proceedings:
  • Lawyers and legal professionals conduct bankruptcy searches as part of due diligence in cases involving debt recovery or financial disputes.
• Credit Assessment:
  • Creditors and financial institutions utilize bankruptcy searches to evaluate the creditworthiness of individuals before extending loans or credit facilities.
• Personal Interest:
  • Individuals may conduct bankruptcy searches out of personal curiosity or when contemplating significant financial engagements.

How to conduct a bankruptcy search

Conducting a bankruptcy search can be done easily online through platforms like EasyLaw. This service allows users to perform a thorough bankruptcy search using just an individual's IC number and name. With this simple and convenient method, you can quickly obtain the necessary information from a bankruptcy search regarding an individual's bankruptcy status without the need for complex procedures or extensive paperwork.

 

Turnaround time for bankruptcy search

• 1-2 working days

 

Information needed for bankruptcy search

• Full name
• New or Old Malaysian Identification Card Number

 

Sample of bankruptcy search

Information in the bankruptcy search report

• Insolvency number
• Name
• Latest address
• Date of receiving the order
• Status of bankruptcy

 

In essence, a bankruptcy search report in Malaysia provides crucial insights into an individual's financial standing and bankruptcy status. Understanding these details is vital for making informed decisions across financial, legal, and professional domains, safeguarding against potential risks associated with bankruptcy.