The figures below come from the Malaysian Department of Insolvency (MdI) as reported by The Edge following Budget 2027. We have not added our own estimates. Where the data does not answer a question, we say so.
Headline numbers
| Measure | Figure |
|---|---|
| New bankruptcies, Jan–Jul 2026 | 4,301 |
| Same period 2025 | 3,679 |
| Change | +16.9% |
| Full year 2025 | 6,776 (+13.4% on 2024) |
| Cases in RM100,000–RM499,999 band, Jan–Jul 2026 | 3,490 |
| Section 33C automatic discharges, Jan–Jul 2026 | 135 (197 in 2025) |
| Section 33A discharges, Jan–Jul 2026 | 14,436 |
Source: MdI data reported by The Edge, October 2026.
Causes
Personal loans accounted for 38.4% of new cases from January to July 2026. The same report lists business loans (757 cases), housing loans (574) and car hire purchase (401) among the other leading causes. Business loans are the cause most relevant to trade creditors: they point to sole proprietors and guarantors whose businesses have failed.
The RM100,000–RM150,000 question
Budget 2027 announced a rise in the bankruptcy threshold from RM100,000 to RM150,000 beginning 2027 (paragraph 80 of the Budget 2027 speech (PMO)). It is not yet law. Because the MdI groups debts in a RM100,000–RM499,999 band, the data does not show how many of the 3,490 cases involved debts between RM100,000 and RM150,000. Anyone claiming to know how many bankruptcies the change will prevent is guessing.
What the numbers suggest for creditors
Rising insolvency among individuals
Two consecutive years of double-digit growth in new cases indicate more individuals unable to meet debts. For businesses selling on credit to sole proprietors and small partnerships, that means more defaults and more competition among creditors for the same limited assets.
Discharge is mostly by certificate
Discharges under section 33A far outnumber section 33C automatic discharges. Budget 2027 says automatic discharge will be strengthened, so the 33C figure may grow. Read automatic discharge under section 33C for the creditor's position.
Bankruptcy is a slow route to money
More bankruptcies mean more estates to administer and more creditors per estate. Direct enforcement of a judgment, through a garnishee orders or writ of seizure and sale, remains the faster path where the debtor still has assets.
What the data does not cover
- Company liquidations, which are reported separately by the Companies Commission and MdI.
- Recovery rates for creditors in bankruptcy.
- Breakdown of the RM100,000–RM499,999 band.
Practical takeaways
- Tighten credit checks on individual and sole-proprietor customers; see credit checks before extending credit.
- Take personal guarantees from directors of small companies.
- Escalate overdue accounts early. A letter of demand at 30 to 60 days overdue is cheap.
- Review individual debtors owing more than RM100,000 while the current threshold applies; see our Budget 2027 explainer and bankruptcy threshold guide.
Use our debt claim calculator to value outstanding claims, or talk to our bad debt recovery team about older files.
Frequently asked questions
How many people went bankrupt in Malaysia in 2026?
4,301 new cases were recorded from January to July 2026, up 16.9% year on year, according to MdI data reported by The Edge.
What is the main cause of bankruptcy in Malaysia?
Personal loans, at 38.4% of new cases from January to July 2026. Business loans, housing loans and car hire purchase follow.
How many bankruptcies were there in 2025?
6,776, up 13.4% on 2024, on the same reported data.
Will the RM150,000 threshold reduce bankruptcies?
Possibly, but the data cannot show by how much, because MdI reports a single RM100,000–RM499,999 band. The change is also not yet law.