# What is the bankruptcy threshold in Malaysia?

In Malaysia a creditor can ask the court to make you bankrupt only if it is owed RM100,000 or more by you, alone or with creditors who join it, usually after a judgment and a bankruptcy notice (Insolvency Act 1967, section 5). A Budget 2027 plan for RM150,000 was not law as at 1 November 2026.

By [Harith Khan](https://www.tkp.com.my/partners/harith) · Published 1 November 2026 · Last reviewed 3 November 2026

## What is the bankruptcy threshold in Malaysia? The short answer

The bankruptcy threshold in Malaysia is RM100,000 or more: the minimum debt before a creditor can apply to the court to make you bankrupt (Insolvency Act 1967, section 5(1)(a)). Only the debt owed to that creditor, or to creditors who join its petition, counts; a Budget 2027 plan for RM150,000 was not law as at 1 November 2026.

Owing RM100,000 or more does not make anyone bankrupt by itself: only a court's bankruptcy order does, usually after a judgment and a bankruptcy notice. Owing less does not end the debt either: the creditor can still sue and enforce a judgment.

The creditor's application is a petition (petisyen pemiutang in Malay; 破产呈请 in Chinese). People also ask how much they must owe to be declared bankrupt, or in Malay "berapa hutang boleh bankrap", fearing they will "kena bankrap". The figure is had bankrap (ambang kebankrapan in the news), and a bankrupt is bankrap or muflis. In Chinese the threshold is 破产门槛.

A lawyer's letter of demand is not a lawsuit and cannot make you bankrupt: see [what to do in the first 7 days after a letter of demand](https://www.tkp.com.my/publications/i-received-a-letter-of-demand-in-malaysia-what-do-i-do-in-the-first-7-days). The free [Lawyer's Letter Check](https://www.tkp.com.my/lawyers-letter-check) names the paper you hold. If you hold a bankruptcy notice, act within 7 days and read "I have received a bankruptcy notice". If you owe, or are owed, less than RM100,000, read "I owe less than RM100,000". Creditors should also read "Whose debts count" and "What should I do now?"; guarantors, the guarantor section.

Key facts (Malaysia, as at 1 November 2026):

- The bankruptcy threshold: a creditor's petition needs a debt of RM100,000 or more.
- Only the debt owed to the creditor who petitions, or to creditors who join it, counts.
- RM100,000 has applied since 23 October 2020.
- A bankruptcy notice gives you 7 days after service to pay, secure or settle the debt, or to apply to set it aside.
- A creditor must petition within 6 months of the act of bankruptcy it relies on, such as not complying with a bankruptcy notice.
- A creditor pays a RM2,000 deposit when it files a petition.
- A social guarantor (of a study loan, a personal car or a home to live in) can never be made bankrupt on that guarantee. Any other guarantor needs the court's permission first.
- A debtor's own petition needs no minimum debt.
- The RM150,000 announced in Budget 2027 was not law as at 1 November 2026.
- A company is wound up, not made bankrupt, usually for a debt of more than RM50,000.

## Is the bankruptcy threshold now RM150,000?

Not yet: Malaysia's Budget 2027 announced a rise in the threshold from RM100,000 to RM150,000, but as at 1 November 2026 it was not law.

The Budget speech of 9 October 2026 said "from 2027" (mulai 2027), without a day. On 26 October 2026 the minister in charge of law told the Dewan Rakyat it was a proposal. The Dewan Rakyat's list of bills, updated on 30 October 2026, held no Bill to change it. We found no Gazette order either.

Until a change is in force, RM100,000 applies, so a creditor owed between RM100,000 and RM150,000 can petition now if the other conditions are met. How a rise treats a case already under way depends on the law that brings it in. The law that made RM100,000 permanent in 2021 saved only petitions already presented.

The figure has risen before: RM30,000 before October 2017, then RM50,000 from 6 October 2017. RM100,000 came on 23 October 2020 as a COVID-19 temporary measure and became permanent on 1 September 2021. A page that still says RM50,000 or RM30,000 is out of date.

## Whose debts count toward the RM100,000 bankruptcy threshold?

Only the debt owed to the creditor who petitions counts, or the total owed to the creditors who join one petition. Your total debts to everyone are not the test, and creditors who do not join add nothing.

Say you owe Bank A RM60,000 and Bank B RM60,000. Neither bank can petition alone, because each is owed less than RM100,000. If both join one petition, together they are owed RM120,000, so they can. And if all your debts together come to less than RM100,000, no creditor can petition, alone or with others, for now. But interest and costs can grow, and each creditor can still sue you.

![Bars against a RM100,000 line. Each bank alone: Bank A is owed RM60,000 and Bank B is owed RM60,000; each falls short, so neither can petition alone. Both join one petition: together RM120,000, past the line, so they can petition. Your total debts are not the test.](https://www.tkp.com.my/media/articles/v1/fa666d939ac37bd9-1440.png)

Figure 1. Whose debts count toward the RM100,000 bankruptcy threshold in Malaysia: the creditor who petitions, or creditors who join it (Insolvency Act 1967, section 5(1)(a))

A creditor who joins needs a fixed sum that is due, not necessarily its own judgment, and must prove it at the hearing. The creditors present one petition, agreeing first who files it and who pays the RM2,000 deposit. It rests on one act of bankruptcy in the last 6 months, such as a debtor's failure to meet one creditor's notice. The Act's words allow relying on another creditor's notice, but we found no appeal court decision on it. Take advice. A petition is not normally advertised before the hearing.

One creditor owed two debts, such as a card and a loan at the same bank, may be able to add them in one petition. The petition form allows more than one debt, but we found no court decision on this.

A judgment against two or more people that does not split the debt can usually be enforced against any one of them for the whole sum. In a 2021 bankruptcy case the Federal Court held that such a judgment did not halve the debt. So a RM120,000 judgment against you and another person may count in full against you.

## What counts in the RM100,000: interest, costs or a home loan?

Usually the judgment sum counts, with its interest and any costs the court has fixed or taxed. For a home loan or other secured debt, only the unsecured part counts. The debt must be a fixed sum (a liquidated debt), due now or on a set date. Damages not yet assessed do not count, and costs still to be taxed are not yet a fixed sum.

Judgment interest runs at 5% a year unless the parties agreed another rate. So a debt a little under the line can cross it: RM90,000 grows by RM4,500 a year. In Peninsular Malaysia interest more than 6 years old cannot be recovered, so it rarely closes a large gap. We found no appeal court decision on exactly how interest and costs are added. If your debts are near RM100,000, an early repayment plan keeps the total down.

On a RM300,000 home loan, with the home valued at RM250,000, only RM50,000 counts, unless the bank gives up its security. After the bank sells the home, the whole shortfall is unsecured and counts.

Paying a small part only to bring the debt under RM100,000 after a notice may not stop a petition. One High Court registrar is reported to have refused to let such a payment block one, and we found no appeal court decision on the point. Take advice before you rely on a part payment.

## I owe RM100,000 or more. Will I be made bankrupt automatically?

No: in Malaysia only a court order makes you bankrupt, after several court steps. Usually they are these.

1. The creditor sues you and wins a court judgment. Never ignore a writ: see [how many days you have to respond to a writ](https://www.tkp.com.my/publications/writ-of-summons-how-many-days-malaysia).
2. The High Court issues a bankruptcy notice (notis kebankrapan; 破产通知书 in Chinese), a formal demand to pay. It can issue on a final judgment of any amount, even from a Sessions or Magistrates' Court. It must be served on you in person, or another way the court allows, within 3 months of issue unless the court extends that time.
3. You have 7 days after service to pay, secure (give security the creditor accepts) or settle the debt, or to apply to set the notice aside.
4. If you do none of these, you commit an act of bankruptcy: an event the law treats as a sign that you cannot pay.
5. Within 6 months of that act, the creditor may file a petition if the RM100,000 test is met, with a RM2,000 deposit. It is served on you, and heard no sooner than 8 days after service.
6. At the hearing the court may make a bankruptcy order, or dismiss the petition.

![Six steps: you owe money; a court judgment; a bankruptcy notice gives 7 days after service to pay, secure, settle or apply to set it aside; if not, an act of bankruptcy; within 6 months, a petition for RM100,000 or more; a bankruptcy order. Owing money alone never makes you bankrupt.](https://www.tkp.com.my/media/articles/v1/20dd9845e804ac95-1440.png)

Figure 2. The usual route from a debt to a bankruptcy order in Malaysia, and where the RM100,000 is tested

A creditor owed RM20,000 can serve a notice. But it helps only if its debt and those of creditors who join reach RM100,000 together, in a petition within 6 months of the act.

A judgment is the usual route, not the only one. Other acts of bankruptcy include transferring property to cheat creditors, leaving Malaysia to avoid them, and telling a creditor you have stopped paying your debts. A seizure of your goods under a judgment of RM1,000 or more is one too. So is a bailiff's report that you had nothing to seize, counted from the day the writ was lodged. None lets a creditor petition for less than RM100,000, and it must petition within 6 months.

The Act's words on stopping payment cover your own debts, not a company's. Never write it to a creditor. Asking for time is different. Write only about this debt and what you can pay each month (see [what not to say when you reply to a letter of demand](https://www.tkp.com.my/publications/reply-letter-of-demand-dispute-malaysia)). If you are worried about something you said, tell your lawyer.

## I have received a bankruptcy notice. What can I do in the 7 days?

A bankruptcy notice gives you 7 days after service to pay, secure or settle the debt, or to ask the court to set it aside (cancel it). You ask by filing an affidavit, a sworn statement.

- Note the day it was served. That day does not count, so treat the 7th day after it as your last day, even on a weekend or public holiday, and act well before it.
- Check the amount, the interest and the judgment it rests on.
- To set it aside, file the affidavit within the 7 days at the High Court that issued the notice; a lawyer usually prepares it. Filing stops the 7 days running out until the court decides.
- Or pay, give security, or settle in writing within the 7 days.

A letter to the creditor does not stop the 7 days; only paying, securing, settling or filing the affidavit does. If the notice claims too much, dispute the amount in writing within the 7 days, and still file the affidavit or pay the correct amount in time.

One ground to set a notice aside is a claim of your own against the creditor (a counterclaim or set-off). It must be at least equal to the debt, and one you could not raise in the court case. Others are service after the 3 months allowed, service not in person without the court's order, and a stayed judgment. For a guarantor, another is no court permission. If you have appealed, ask the court at once to stay the judgment's enforcement. It can also pause or dismiss a petition while the appeal is pending.

Ask a lawyer about a voluntary arrangement, a deal you propose to your creditors. Once the court makes an interim order for it (a temporary pause), no petition can be filed or continued for up to 90 days. It does not replace acting on the notice within the 7 days.

A notice or petition does not take your home: nothing passes until a bankruptcy order. But the order reaches back to the act of bankruptcy, so do not sell or give away property without advice.

## I owe less than RM100,000. What can the creditor still do?

Below RM100,000 a creditor cannot make you bankrupt on its own, but it can still sue you and, after judgment, use the court's other tools to collect. These include:

- [seizing and selling your goods](https://www.tkp.com.my/publications/bailiff-seize-parents-house-malaysia), such as a car you own, through the court bailiff (a writ of seizure and sale);
- taking money in your bank account (a garnishee order);
- summoning you to court to answer questions on oath about your money, and ordering you to pay by instalments (a judgment debtor summons);
- serving a bankruptcy notice, which can issue on a judgment of any amount.

At RM100,000 or more owed to it, a creditor has the same tools and can also petition.

Some things stay out of reach: EPF savings, a government pension, basic household items and ordinary work tools up to RM200 in all, and a craftsperson's or farmer's working tools needed to earn a living, with no cap. No order can take your salary from your employer for an ordinary debt. But a garnishee order can take money in your bank account. No Federal Court or Court of Appeal decision we found settles whether salary keeps its protection there. A bank you owe may also take money from your account with it after at least 7 days' notice, so read any such notice at once. See [how a creditor enforces a judgment in Malaysia](https://www.tkp.com.my/publications/enforce-judgment-malaysia).

![Two columns: under RM100,000 and RM100,000 or more. In both, a creditor can sue and win a judgment, seize and sell your goods, take money in your bank account, summon you to court and serve a bankruptcy notice. Only at RM100,000 or more can it petition alone. Either way, the debt is still owed.](https://www.tkp.com.my/media/articles/v1/2459dbf69df79d92-1440.png)

Figure 3. What a creditor can do below and above the RM100,000 bankruptcy threshold in Malaysia

So owing less than RM100,000 does not make the debt go away. It keeps growing with interest after judgment. A repayment plan agreed in writing before judgment can avoid these steps.

## Can a bank make me bankrupt for credit card debt?

Yes, on the same terms as any creditor: the bank must be owed RM100,000 or more, alone or with creditors who join it, and usually needs a judgment first.

So a bank owed RM30,000 on a card cannot petition on its own, though it can still sue you. If it is also owed a personal loan, the two debts may be added.

If you are struggling to pay, AKPK (Agensi Kaunseling dan Pengurusan Kredit), [an agency set up by Bank Negara Malaysia](https://www.bnm.gov.my/-/transfer-of-the-small-debt-resolution-scheme-to-agensi-kaunseling-dan-pengurusan-kredit-akpk-), gives free counselling. It may also arrange a repayment plan with your banks. Go early, before a bank sues: a letter of demand from its lawyers is not a lawsuit, but a writ from the court is.

## Does the RM100,000 apply to a guarantor?

Yes, and more: a social guarantor can never be made bankrupt on that guarantee, and any other guarantor only for RM100,000 or more and with the court's permission. A social guarantor (penjamin sosial in Malay; 社会担保人 in Chinese) gave the guarantee not for profit. It covered a study loan or scholarship, a car or other vehicle on hire purchase for personal use, or a housing loan for a home to live in. They can still be sued.

For any other guarantor (担保人 in Chinese), the creditor needs the court's permission before it starts any bankruptcy action, even the notice. The court gives it only after the creditor has tried every other way against the borrower, including winding up a borrower company. In 2024 the Court of Appeal set aside a notice and petition against a director-guarantor because the creditor never got that permission. Once the company is wound up, courts usually treat the test as met, so this protection may only delay bankruptcy. The winding up does not end your guarantee.

If you hold a notice as a guarantor, the creditor's application for permission should have been served on you before it; the notice itself does not show it. If you never received one, show your papers to a lawyer within the 7 days: a notice issued without permission can be set aside. See [what a guarantor faces after a letter of demand](https://www.tkp.com.my/publications/guarantor-letter-of-demand-malaysia).

## Can I declare myself bankrupt if I owe less than RM100,000?

Yes: the RM100,000 binds only a creditor, and a debtor's own petition has no minimum debt. You file it at the High Court, saying you cannot pay your debts, with a RM1,500 deposit. The court must then make a bankruptcy order, and you cannot withdraw without its permission. Bankruptcy has lasting effects, set out below, so first weigh a repayment plan or a voluntary arrangement.

## Is the threshold different for a company?

Yes: a company is wound up (closed down by the court), not made bankrupt. The usual route needs a debt of more than RM50,000 (Companies Act 2016, section 466). The creditor leaves a written demand at its registered office, and the company has 21 days to pay, secure or settle; no judgment is needed.

RM200,000 is not the bankruptcy threshold either: it is a figure set in 2026 under a separate law on cross-border insolvency.

## What happens if I am made bankrupt, and how does it end?

Once the court makes a bankruptcy order, your property passes to the Director General of Insolvency, who runs bankruptcies through the Department of Insolvency (Jabatan Insolvensi Malaysia, or MdI). The Director General shares it among your creditors, who can no longer sue you without the court's permission. In practice:

- a home you own, or your share of one you co-own, passes to the Director General, who may sell it; your co-owner's share stays theirs;
- a bank with a charge on your home can still sell it. Any surplus goes to the Director General, and any shortfall is an ordinary debt in the bankruptcy;
- a car on hire purchase belongs to the finance company; bankruptcy alone does not let it take the car back, but missed instalments can;
- you keep tools of trade up to RM20,000 and household necessaries up to RM10,000;
- you can work for an employer, but not in your spouse's or close family's business without permission. You must account every 6 months and pay over income your family does not need. Some employers and professions have their own rules, so check your terms of service;
- you need permission from the Director General or the court to leave Malaysia, run a business or be a company director; these limits start with the bankruptcy order.

A bankruptcy ends by annulment, if your debts are paid in full or the court finds the order ought not to have been made. Or it [ends by discharge](https://www.tkp.com.my/publications/bankruptcy-discharge-malaysia): automatically 3 years after you submit your statement of affairs (a list of your assets and debts), if you met the conditions. The Director General can also grant a certificate after at least 5 years, or the court a discharge.

In 2025, 6,776 people were made bankrupt in Malaysia, and 26,501 were released by the Director General's certificate. A discharge does not end fines, fraud debts or debts owed to the Government, such as income tax. Anyone who guaranteed your own debts stays liable.

## What should I do now?

Act early and never ignore a court paper. If you hold a bankruptcy notice, start with the 7-day steps above.

If you owe money:

- List what you owe each creditor, with interest.
- Talk to the creditor, or, for bank loans, to AKPK, about a repayment plan you can keep.
- Get any deal in writing, and make sure it says what it settles.

If you are owed money:

- Search the debtor's name on MdI's e-Insolvensi portal first. If they are already bankrupt, file a proof of debt with the Director General, not a petition.
- Check that your debt, alone or with creditors who will join you, reaches RM100,000.
- In the usual case, get a judgment, then a bankruptcy notice, and serve it within 3 months of issue.
- Plan for court fees (RM40 for the notice, RM150 for the petition), the RM2,000 deposit and lawyer's fees. Once filed, a petition cannot be withdrawn without the court's permission.
- Bankruptcy helps most when the debtor has property, income or money owed to them. If they have nothing, or everything is charged to a bank, creditors may recover little, and the deposit may go on fees. Below the threshold, enforce the judgment instead; see [the steps of debt recovery in Malaysia](https://www.tkp.com.my/debt-recovery).

Talk to a lawyer as soon as a bankruptcy notice or petition is served on you, or before you spend money on one. Bring the notice, the judgment, any guarantee or loan papers, and the date and way you were served. If a writ arrives, or you are unsure what to agree with several banks, a lawyer can check your papers before you sign. If you cannot pay one, the [Bar Council Legal Aid Centre](https://www.malaysianbar.org.my/article/public/legal-aid/bc-legal-aid-scheme/about/bc-legal-aid-scheme-about) gives free legal advice in Peninsular Malaysia. In Sabah, ask the Sabah Law Society's Legal Aid Clinic; in Sarawak, the Advocates Association of Sarawak.

This article is general information about Malaysian law as at 1 November 2026. Its bankruptcy rules apply in all of Malaysia, but its time limits for old judgments are Peninsular Malaysia's. It is not legal advice on your situation, and reading it does not make you a client of the firm. Thresholds, fees and deposits change, so check the current rule before you rely on a figure.

## Frequently asked questions

### How much do I have to owe to be made bankrupt in Malaysia: RM100,000 or RM50,000?

RM100,000 or more, owed to one creditor or to creditors who join its petition. So if you owe two banks RM70,000 each, neither can petition alone, but together they can. RM50,000 was the figure from 6 October 2017 until 22 October 2020, and RM30,000 before that. RM100,000 has applied since 23 October 2020, permanently from 1 September 2021 (Insolvency (Amendment) Act 2020). Owing that much does not make you bankrupt by itself: a creditor must still apply to the court, usually after a judgment and a bankruptcy notice.

### When will the RM150,000 threshold start?

No start date had been set in law as at 1 November 2026. The Budget 2027 speech on 9 October 2026 said "from 2027" without giving a day, and on 26 October 2026 the minister called it a proposal in Parliament. The figure in the Insolvency Act 1967 can change through an amending Act, or for a fixed period through a ministerial order in the Gazette. As far as we found, neither had been made by 1 November 2026. Until one is in force, a creditor needs RM100,000 or more. Check the current law before you rely on either figure.

### If the threshold rises to RM150,000, what happens to a case already filed?

No official statement says, as at 1 November 2026: it depends on the law that brings in the change. When the figure rose to RM100,000 in 2020 and 2021, petitions already filed under the old figure were allowed to continue under it. A temporary order under the Insolvency Act 1967 has its own rule for petitions pending when it ends. Until a change is in force, a petition for RM100,000 or more can be filed and heard as now. Whether you face a petition or are a creditor, act within the time limits on your papers.

### I was made bankrupt when the figure was RM50,000. Am I released now?

No. A higher threshold limits new petitions; it does not end a bankruptcy order already made. The laws that raised the figure to RM100,000 in 2020 and 2021 did not cancel existing orders. Your bankruptcy ends only by annulment or by discharge. Discharge can come automatically 3 years after your statement of affairs, if you met the conditions. It can also come by the Director General of Insolvency's certificate after at least 5 years, or by the court. Ask the Department of Insolvency (MdI) about your case and its Second Chance Policy, which gives some groups priority.

### Someone owes me less than RM100,000. Can I make them bankrupt?

Not on your own. In Malaysia you can petition only if you are owed RM100,000 or more, alone or with creditors who join your petition (Insolvency Act 1967, section 5(1)(a)). A creditor who joins needs a fixed sum that is due, not necessarily its own judgment. Meanwhile, after a judgment, you can use a garnishee order on the debtor's bank account or a judgment debtor summons. A bankruptcy notice helps only if, with creditors who join, the total reaches RM100,000. No judgment yet? See [what to do when a letter of demand is ignored](https://www.tkp.com.my/publications/letter-of-demand-ignored-next-step-malaysia).

### Can a creditor make me bankrupt without suing me first?

Usually a creditor sues first, because the common route rests on a court judgment and a bankruptcy notice. But some acts of bankruptcy need no judgment (Insolvency Act 1967, section 3(1)). Examples are telling a creditor that you have stopped paying your debts, transferring property to cheat creditors, or leaving Malaysia to avoid them. A creditor relying on one must still be owed RM100,000 or more, alone or with creditors who join, and must petition within 6 months. A lawyer's letter of demand is not itself an act of bankruptcy.

### A bankruptcy petition has been filed against me. What can I still do?

Act at once: a petition is not yet bankruptcy. In Malaysia you can oppose it by filing a notice of what you dispute at least 3 days before the hearing (Insolvency Rules 2017, rule 116). The court may dismiss it if you show you can pay your debts, or for another good reason, or pause it while a real dispute over the debt is tried. Paying the creditor does not end it by itself. It can be withdrawn only with the court's permission, and the court may let another creditor owed RM100,000 or more take over.

### How long do I have after I receive a bankruptcy notice?

You have 7 days after the notice is served on you in Malaysia. The day of service does not count, so treat the 7th day after it as your last day and act well before it. You can pay, secure or settle the debt, or file an affidavit at the court to set the notice aside. Filing it stops the time running out until the court decides (Insolvency Rules 2017, rule 93); a letter to the creditor does not. If the notice claims too much, dispute it in writing within the 7 days and still file the affidavit.

### Can I be made bankrupt without knowing?

Yes, it can happen in Malaysia. The Department of Insolvency (MdI) says it happens when papers went to an old address, or when the person did not attend court. It can also happen when the court allowed service by a newspaper advertisement. Check your own status on MdI's e-Insolvensi portal for RM10. If you find an order you never knew about, see a lawyer at once. The court can annul an order that ought not to have been made, for example because the papers were not properly served (Insolvency Act 1967, section 105).

### How do I check if I, or someone else, is bankrupt?

Search the e-Insolvensi portal or app of Malaysia's Department of Insolvency (MdI). Anyone can search a person's bankruptcy status for RM10, and the same portal shows whether a company is being wound up; the result comes at once. MdI treats the result as a valid official document. A creditor should search before spending money on a bankruptcy notice. If the person is already bankrupt, do not file a new petition. File a proof of your debt with the Director General of Insolvency, for a fee of RM10 to RM50, to share in what is collected.

### Can a licensed moneylender or a supplier make me bankrupt?

Yes, on the same terms as a bank. In Malaysia any creditor owed a fixed sum can petition if it is owed RM100,000 or more, alone or with creditors who join. It usually needs a judgment and a bankruptcy notice first. A licensed moneylender must also prove its debt with the details the Moneylenders Act 1951 requires (Insolvency Rules 2017, rule 114). This answer is about lawful lenders. Below RM100,000, any creditor can still sue you and enforce a judgment, but only through the court.

### Can I be made bankrupt over a PTPTN study loan?

As a borrower, only on the usual terms. The lender must be owed RM100,000 or more, alone or with creditors who join, and usually needs a judgment and a bankruptcy notice first. As a guarantor of a study loan, given not for profit, no. You are a social guarantor, and in Malaysia no creditor can start bankruptcy action against you on that guarantee (Insolvency Act 1967, section 5(3)). The lender can still sue a borrower or a guarantor for what is owed.

### Does the bankruptcy threshold apply in Sabah and Sarawak?

Yes. The Insolvency Act 1967 applies throughout Malaysia, so a creditor in Sabah or Sarawak also needs RM100,000 or more, alone or with creditors who join, to petition. The Act repealed the old Sarawak and Sabah bankruptcy ordinances; only estates already under orders made under them continue under them. The same 7 days to answer a bankruptcy notice, the same 6 months to petition and the same RM2,000 creditor's deposit apply there. A debtor's own petition has no minimum there either.

### Can AKPK stop a bankruptcy?

Not by itself. AKPK, set up by Bank Negara Malaysia, gives free counselling and may arrange a repayment plan with your banks, but it cannot stop a petition. In Malaysia a court interim order for a voluntary arrangement, a deal you propose to your creditors, can. While it lasts, up to 90 days, no petition can be filed or continued. It does not replace acting on a bankruptcy notice within the 7 days. In our reading of the Insolvency Act 1967, an AKPK officer can act as the nominee who runs such an arrangement, so ask AKPK about it.

### What does it cost a creditor to make someone bankrupt?

In Malaysia the court fees are RM40 for a bankruptcy notice, RM150 for a creditor's petition and RM40 for the order (Insolvency (Fees) Rules 1969). The creditor also deposits RM2,000 with the Director General of Insolvency, refunded from the estate if there is enough. Lawyers' fees are extra. The Director General takes 7% of the first RM50,000 it realises, 6% of the next RM50,000 and 5% above that, and 5% to 3% of what it pays out. We found no official figure for how long it takes. The fixed steps alone take weeks to months; a defended petition takes longer.

### Can a creditor use an old judgment to make me bankrupt?

Yes, within limits. In Peninsular Malaysia a bankruptcy based on a judgment must start within 12 years of the judgment (Limitation Act 1953, section 6(3)). Interest more than 6 years old cannot be claimed, and the Federal Court has held that a notice including it was invalid. Sabah and Sarawak have their own limitation laws, so ask a lawyer there. The petition still needs RM100,000 or more, alone or with creditors who join. For a debt with no judgment yet, see [whether an old debt can still be claimed](https://www.tkp.com.my/publications/limitation-period-debt-malaysia).

### Can I travel abroad, or lose my job, if I owe money but am not bankrupt?

Usually you can travel. In Malaysia a debt, a letter of demand, a judgment, a bankruptcy notice or a petition does not by itself stop you. The Insolvency Act's travel limits start with a bankruptcy order. But leaving to avoid your creditors is an act of bankruptcy, and a debtor about to abscond can be arrested. If you hold a notice or petition, tell your lawyer before you travel. Unpaid income tax and, for some borrowers, PTPTN arrears can block travel. As for your job, some employers have their own rules on debt, so check your terms of service.

### Can a bankrupt travel abroad or keep a bank account?

Only with permission. A bankrupt in Malaysia may not leave the country without the prior permission of the Director General of Insolvency or the court (Insolvency Act 1967, section 38). The Department of Insolvency (MdI) takes applications on its e-Insolvensi portal or at the branch handling the case. Reasons include work, medical treatment, worship or another reasonable personal reason. MdI also says a bankrupt's existing bank accounts are closed. The bankrupt can apply to open a new account or reactivate one, for example to receive a salary.

### Will bankruptcy stay on my CTOS or CCRIS record?

Not forever. In Malaysia a credit reporting agency such as CTOS must not report your bankruptcy more than 2 years [after your discharge](https://www.tkp.com.my/publications/bankruptcy-discharge-malaysia) (Credit Reporting Agencies Act 2010, section 25). CCRIS, Bank Negara's credit record, has no blacklist, and it shows a bankruptcy status only as the lender reports it. After a discharge or annulment, tell the Department of Insolvency (MdI) and your banks, so that the records show your current status. Keep your discharge papers safe.

### Does being made bankrupt mean prison in Malaysia?

No. Bankruptcy is not a prison sentence, and in Malaysia not paying a debt is not by itself a crime. But a bankrupt who borrows RM1,000 or more without saying they are bankrupt commits an offence. Separately, after a judgment a court can send a debtor to civil prison for up to 6 weeks (Debtors Act 1957, section 4). It can do so only if they missed a payment the court ordered and had the means to pay. Prison does not cancel the debt. See [whether not paying a debt is a crime](https://www.tkp.com.my/publications/police-report-unpaid-debt-malaysia).

## Sources

1. [Insolvency Act 1967 (Act 360), sections 1, 2, 2A to 2O, 3, 5, 6, 7, 8, 16, 28, 33, 33A, 33B, 33C, 35, 38, 47, 48, 95, 105, 109 and 139, reprint as at 1 November 2024](https://lom.agc.gov.my/ilims/upload/portal/akta/outputaktap/2142388_BI/WJW24%EF%80%A20991%20Act%20360%20%28Reprint%202024%29.pdf)
2. [Insolvency (Amendment) Act 2020 (Act A1624), sections 2 and 3 (RM100,000; saving for pending petitions)](https://www.mdi.gov.my/wp-content/uploads/2025/04/Akta-1624-Akta-Insolvensi-Pindaan-2020.pdf)
3. P.U.(B) 96/2021: Act A1624 in force on 1 September 2021
4. [Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Act 2020 (Act 829), sections 19 to 21 (RM100,000 from 23 October 2020 to 31 August 2021)](https://www.acem.com.my/wp-content/uploads/2020/10/20201023_829_BI_Act-829.pdf)
5. [Insolvency (Amendment) Act 2023 (Act A1695), in force 6 October 2023 (automatic discharge)](https://www.mdi.gov.my/wp-content/uploads/2025/04/Akta-A1695-Akta-Insolvensi-Pindaan-2023-1.pdf)
6. [Insolvency Rules 2017 (P.U.(A) 305/2017), rules 83, 89, 92, 93, 94, 97, 102, 113, 114 and 116, and Forms 34 and 41](https://www.mdi.gov.my/wp-content/uploads/2025/04/Kaedah-Kaedah-Insolvensi-2017.pdf)
7. [Insolvency (Amendment) Rules 2023 (P.U.(A) 301/2023), rule 179A (tools of trade RM20,000; household necessaries RM10,000)](https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/1865734/PUA301_2023.pdf)
8. [Insolvency (Fees) Rules 1969, Revised 2017 (P.U.(A) 351/2017), Tables A to C](https://www.mdi.gov.my/wp-content/uploads/2025/04/Kaedah-Kaedah-Insolvensi-Fi-1969.pdf)
9. [Ministry of Finance: Budget 2027 speech (Ucapan Belanjawan 2027), 9 October 2026, paragraph 80](https://belanjawan.mof.gov.my/pdf/belanjawan2027/ucapan/ub27.pdf)
10. [Dewan Rakyat Hansard, 26 October 2026 (uncorrected text): the RM150,000 described as a proposal](https://www.parlimen.gov.my/files/hindex/pdf/DR-26102026.pdf)
11. [Parliament of Malaysia: Dewan Rakyat bills list, updated 30 October 2026 (no Bill to change the threshold)](https://www.parlimen.gov.my/bills-dewan-rakyat.html?uweb=dr&lang=en)
12. [Rules of Court 2012 (P.U.(A) 205/2012), Order 42 rule 12 (interest on judgment debts) and Orders 45 and 49 (Malaysian Bar copy of the gazette text)](https://www.malaysianbar.org.my/cms/upload_files/document/Rules%20of%20Court%202012.01.07.2012.pdf)
13. [Chief Justice's Practice Direction No. 1 of 2012 (interest on judgment debts at 5% a year), in Bar Council Circular No. 165/2012](https://www.malaysianbar.org.my/cms/upload_files/document/Circular%20No%20165-2012.pdf)
14. [Debtors Act 1957 (Act 256), sections 3, 4 and 14](https://lom.agc.gov.my/ilims/upload/portal/akta/LOM/EN/Act%20256.pdf)
15. Employees Provident Fund Act 1991 (Act 452), section 51, updated text as at 1 July 2022
16. [Limitation Act 1953 (Act 254), section 6(3)](https://lom.agc.gov.my/ilims/upload/portal/akta/LOM/EN/ACT%20254-Online%20version%20as%20at%201%20Sept%202019.pdf)
17. [Hire-Purchase Act 1967 (Act 212), sections 2 and 34, reprint as at 1 March 2013](https://lom.agc.gov.my/ilims/upload/portal/akta/LOM/EN/Act%20212.pdf)
18. [Companies Act 2016 (Act 777), section 466, updated text as at 31 January 2025](https://lom.agc.gov.my/ilims/upload/portal/akta/outputaktap/3372888_BI/Act%20777%20%28Online%202026%29.pdf)
19. [Gazette Notification No. 4159 of 29 March 2021 (company debt of more than RM50,000, from 1 April 2021)](https://www.ssm.com.my/Pages/Legal_Framework/Document/GN%20No.%204159_Penetapan%20Amaun%20Keterhutangan%20Syarikat.pdf)
20. Cross-Border Insolvency (Prescription of Threshold) Order 2026 (P.U.(A) 299/2026), in force 28 August 2026
21. [Credit Reporting Agencies Act 2010 (Act 710), section 25, reprint as at 1 November 2024](https://ppapk.treasury.gov.my/images/pdf/Act%20710.pdf)
22. [Department of Insolvency (MdI): frequently asked questions on bankruptcy (Soalan Lazim Kebankrapan), including RM10 a search, property and travel](https://www.mdi.gov.my/soalan-lazim-kebankrapan-1/)
23. [Department of Insolvency (MdI): frequently asked questions on searches (who can search; result valid without signature)](https://www.mdi.gov.my/soalan-lazim-carian/)
24. [Department of Insolvency (MdI): bankruptcy statistics, Brief Note to December 2025](https://www.mdi.gov.my/wp-content/uploads/2026/01/BRIEF-NOTE-DISEMBER-2025.pdf)
25. [Department of Insolvency (MdI): frequently asked questions on the Second Chance Policy](https://www.mdi.gov.my/soalan-lazim-dasar-peluang-kedua/)
26. [Bank Negara Malaysia: CCRIS page and frequently asked questions (no blacklist)](https://www.bnm.gov.my/ccris)
27. [Bank Negara Malaysia and AKPK, 14 August 2020: AKPK, an agency of Bank Negara Malaysia, takes over the Small Debt Resolution Scheme](https://www.bnm.gov.my/-/transfer-of-the-small-debt-resolution-scheme-to-agensi-kaunseling-dan-pengurusan-kredit-akpk-)
28. [Bank Negara Malaysia, Policy Document on Product Transparency and Disclosure (2 December 2024), Schedule I paragraph S 1.3.4 (set-off notice of at least 7 calendar days)](https://www.bnm.gov.my/documents/20124/938039/pd_product_transparency_and_disclosure_dec2024.pdf)
29. Inland Revenue Board of Malaysia (LHDN): Public Ruling No. 4/2022, Recovery from Persons Leaving Malaysia (Income Tax Act 1967, section 104)
30. [PTPTN: Budget 2026 initiatives, targeted travel restriction on borrowers (20 January 2026)](https://www.ptptn.gov.my/en/pelaksanaan-inisiatif-belanjawan-2026/)
31. [Bar Council Legal Aid Centre: about the scheme (legal advice is free)](https://www.malaysianbar.org.my/article/public/legal-aid/bc-legal-aid-scheme/about/bc-legal-aid-scheme-about)
32. [Sabah Law Society: Legal Aid Clinic](https://www.sabahlawsociety.org/for-public/legal-aid-clinic)
33. [Advocates Association of Sarawak: Legal Aid](https://sarawak-advocates.org.my/legal-aid/)
34. Lembaga Kumpulan Wang Simpanan Pekerja v Edwin Cassian Nagappan @ Marie (Federal Court, Civil Appeal 03-3-10-2019(W), 19 July 2021)
35. Kejuruteraan Bintai Kindenko Sdn Bhd v Fong Soon Leong (Court of Appeal, Civil Appeal B-03(IM)(NCC)-44-05-2019, 20 January 2021)
36. Yuri Zaharin Wahab v Ann Joo Metal Sdn Bhd (Court of Appeal, Civil Appeal B-03(IM)(NCC)-3-01-2023, 2 September 2024)
37. Affin Bank Bhd v Abu Bakar Ismail (Federal Court, Civil Appeal 03(f)-05-10-2017(W), 25 February 2020)
38. Perwira Affin Bank Bhd v Lim Ah Hee \[2004\] 2 CLJ 787 (Federal Court, 18 May 2004)

Web page: https://www.tkp.com.my/publications/bankruptcy-threshold-malaysia