SELANGOR has emerged as the state with the highest number of bankruptcy cases nationwide, with teachers identified as one of the largest groups of affected civil servants, the Director General of the Malaysian Department of Insolvency (MDI), Datuk Ishak Bakri, said.
He attributed the trend primarily to high levels of personal loan commitments, noting that individuals with fixed incomes are more exposed to bankruptcy risks.
This conclusion is based on aggregated insolvency data and insights gained through financial literacy programmes conducted by MDI in Selangor.
“This is because fixed-income earners such as teachers are found to obtain approval for personal loans more easily, but they face significant risks if they fail to manage their financial commitments prudently,” he said.
“This group has stable income, which makes access to loans easier. However, when commitments become unmanageable, it creates long-term financial pressure,” he added.
Ishak made the remarks after officiating a Financial Literacy Programme in collaboration with higher education institutions at Politeknik Merlimau Melaka on Monday.
Despite the concerning figures, he said Malaysia recorded a positive development last year, with 200,000 individuals successfully discharged from bankruptcy, exceeding the government’s Key Performance Indicator target.
He explained that the country’s insolvency system is no longer punitive in nature, but instead focuses on welfare and rehabilitation, in line with the government’s policy of offering citizens a second chance.
“Among the major reforms is the amendment to the Insolvency Act in 2023, which empowers the Director General of Insolvency to discharge bankrupt individuals without the need for a court order, subject to specific criteria under the Second Chance Policy,” he said.
According to Ishak, discharge criteria include individuals aged over 70, cases that have remained unresolved for an excessively long period, and individuals certified as having mental health conditions.
“Malaysia is among the earliest countries to incorporate mental health as a criterion for bankruptcy discharge. Once verified confidentially by a medical panel, the discharge can be granted immediately,” he said.
He added that MDI is also planning to introduce new discharge criteria through a fast-track mechanism, targeting single mothers with dependants, victims of financial fraud, and micro-loan borrowers. - January 19, 2026
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