A creditor can only petition to make you bankrupt if you owe at least RM100,000 (alone, or several creditors together), the debt is a liquidated sum and the act of bankruptcy happened within the last six months (Insolvency Act 1967, s 5(1)). No bankruptcy action at all may be brought against a social guarantor, and other guarantors are protected until the creditor has tried everything else and obtained the court's leave (s 5(3)–(4)). A bankrupt who has paid the amount set by the Director General of Insolvency and accounted for money and property is discharged automatically after three years from submitting the statement of affairs (s 33C).
Licensed moneylenders may charge at most 12% a year on a secured loan and 18% a year on an unsecured loan (Moneylenders Act 1951, s 17A). Borrowing from an unlicensed lender (ah long) is risky and the lender commits an offence.
What to do first
- Never ignore a letter of demand, summons or bankruptcy notice — deadlines run from the date you are served.
- Struggling with repayments: ask your bank about restructuring, or get free debt counselling from AKPK (set up by Bank Negara Malaysia).
- Check whether a moneylender is licensed with KPKT before you borrow.
- Scammed? Contact your bank immediately and make a police report; check suspicious accounts and phone numbers on the police's Semak Mule portal.
- Check whether you have been made bankrupt with the Malaysian Department of Insolvency (MdI).
Which court or agency?
| Problem | Where to go | Law |
|---|---|---|
| Someone owes you RM5,000 or less | Magistrates' Court — small claims | Rules of Court 2012, Order 93 |
| Debt up to RM100,000 / up to RM1 million | Magistrates' Court / Sessions Court | Act 92 ss 90, 65 |
| Bankruptcy | High Court; Malaysian Department of Insolvency | Act 360 |
| Moneylender complaints | KPKT (moneylending licensing) | Act 400 |
Read the guides
Small claims (RM5,000 and below)Enforcing a judgmentContracts Act 1950Consumer rights
Tools
Key laws — read the copy
| Act 360 | Insolvency Act 1967 Akta Insolvensi 1967 | PDF · Official ↗ |
| Act 400 | Moneylenders Act 1951 Akta Pemberi Pinjam Wang 1951 | PDF · Official ↗ |
| Act 212 | Hire-Purchase Act 1967 Akta Sewa Beli 1967 | PDF · Official ↗ |
| Act 256 | Debtors Act 1957 Akta Penghutang 1957 | PDF · PDF (BM) · Official ↗ |
| Act 873 | Consumer Credit Act 2025 Akta Kredit Pengguna 2025 | PDF · PDF (BM) · Official ↗ |
| Act 574 | Penal Code Kanun Keseksaan | PDF · Official ↗ |
| Act 92 | Subordinate Courts Act 1948 Akta Mahkamah Rendah 1948 | PDF · PDF (BM) · Official ↗ |
| Federal subsidiary legislation | Rules of Court 2012 [P.U. (A) 205/2012] Kaedah-Kaedah Mahkamah 2012 | Official ↗ |
Each law opens our mirror page: a copy of the official text with its capture date and version history, plus the official link.
Official links and forms
- Malaysian Department of Insolvency (MdI) ↗
- AKPK — credit counselling and debt management ↗
- PDRM Semak Mule — check scam accounts and numbers ↗
- Bank Negara Malaysia ↗
- KPKT — moneylending ↗
Questions people ask
Does a contract have to be in writing?
Usually not. An oral agreement can be a binding contract if it meets s 10. But some contracts must be in writing under specific laws, such as many land dealings, and a promise without consideration is only valid in the cases in s 26, most of which need writing. Writing is always better evidence.
Can my employer stop me working for a competitor after I leave?
Generally no. Under s 28, restraints on exercising a lawful profession, trade or business are void, except in the three narrow cases in the section, none of which covers ordinary employment. You must still not misuse confidential information. A 2026 reform proposal would introduce a reasonableness test, but it is not yet law.
The contract says I must pay RM10,000 if I cancel. Is that enforceable?
Under s 75, the other party can recover reasonable compensation up to that sum, without proving actual loss. Following Cubic Electronics (2019), if you say the sum is unreasonable, you must prove it, for example by showing it is extravagant compared with any loss they could suffer.
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