PETAL JAYA: Many Malaysians earn less than enough to survive, but spend more on unnecessary items.
They were able to continue to take on debt thanks to the ease of access to personal loans and credit cards.
Finwealth Management Sdn Bhd Director of Financial Planning Felix Neoh pointed out that the habit of borrowing money without considering its repayment capacity has led many people to financial ruin.
“And until wages rise alongside the rising cost of living, many more will experience financial hardship,” he said. the sun.
According to a recent report, the Covid-19 pandemic has pushed many more Malaysians into debt.
The report says that Bank Negara Malaysia’s Credit Counseling and Debt Management Agency (AKPK) has helped many people avoid bankruptcy, especially those with low incomes.
Personal loans accounted for almost half of all cases leading to bankruptcy. From 2017 to October 2021, a total of 22,756 people had difficulty repaying their personal loans, followed by 10,568 who were unable to repay their rental car purchase, 7,043 who did not repay their loans businesses and 6,704 who were unable to keep track of their housing loan payments.
A total of 21,804 people declared bankrupt were aged 35 to 44, while those 45 to 54 accounted for 15,272 cases.
Neoh noted that many Malaysians continue to receive very low wages despite the companies they work for making huge profits.
“The wealth gap here has widened and it is the worker who is paying the price,” he said.
He pointed out that prices rise as the value of money falls, but incomes remain stagnant, leaving many unable to save for a rainy day.
Neoh said the high number of people severely affected by recent flooding served as an illustration of the extent of the debt problem.
However, low income is not the only factor. Neoh said that many people also tend to spend all of their disposable income on unnecessary items. Those without cash end up buying on credit.
“There is easy access to personal loans to make ends meet or to buy new items, and woe to those who are unable to meet the payment schedule,” he said.
“They’re just digging a deeper hole for themselves.”
Neoh also advised against withdrawing money from the Employee Provident Fund (EPF) to meet his immediate debts. “Outside of retirement or buying a house, tapping into EPF savings is not a good idea.
He added that many of those who lost their jobs in the economic fallout from the Covid-19 pandemic have already made several withdrawals under the i-Sinar program to recover from lean periods.
He said those who don’t earn enough to put money aside each month rely on PEF savings after retirement.
“But such withdrawals have seriously damaged the retirement plans of many people.”
Fortunately, this is not the end of the road. People in financial difficulty can take back control of their lives through AKPK’s Debt Management Program (DMP).
The agency helps by developing a personalized debt repayment plan for the person seeking help.
The plan is developed in consultation with the bank.
However, those who wish to go this route must show that they still have money after paying all the expenses.
Apart from this, the total debt must not exceed 5 million ringgit, the debtor must not be at an advanced stage of a dispute such as a creditor’s petition, and must not already be in bankruptcy, said the agency. the sun.
Under the DMP, debtor’s lines of credit such as credit cards and overdraft facilities are withdrawn.
However, if he applies for a loan, the bank has the discretion to approve or reject it.
The benefits of going under the DMP are cash flow realignment, reasonable payment terms, a moratorium on legal proceedings and no harassment from debt collectors.