On 9 October 2026 the Prime Minister and Finance Minister tabled Budget 2027. Paragraph 80 of the Budget 2027 speech (PMO) said that, beginning 2027, the government has decided to raise the bankruptcy threshold from RM100,000 to RM150,000. The announcement was reported the same day by The Star, Bernama and NST.
The RM150,000 bankruptcy threshold was announced in Budget 2027 (9 October 2026, speech paragraph 80) for "beginning 2027". It is not yet law: no amending bill, gazette or commencement date has been published. Until the Insolvency Act 1967 is amended, the minimum debt for a creditor's bankruptcy petition remains RM100,000. The RM50,000 winding-up threshold under section 466 of the Companies Act 2016 is unchanged. We will update this page when the amendment is gazetted.
What the bankruptcy threshold actually is
The threshold is the minimum amount an individual must owe before a creditor can present a bankruptcy petition against them under the Insolvency Act 1967. It applies to individuals: sole proprietors, partners, guarantors (other than social guarantors, who are protected separately) and private persons. It does not apply to companies, which are dealt with by winding-up under the Companies Act 2016.
The threshold was last raised from RM50,000 to RM100,000. The new announcement would lift it again by half. Our existing bankruptcy threshold guide explains how the current RM100,000 rule works in practice.
Is RM150,000 in force now?
No. A Budget speech is a statement of policy. Changing the threshold requires an amendment to the Insolvency Act or an order made under it, followed by gazettal and a commencement date. As of 16 October 2026 we have found no published bill and no gazette notice. The speech gives only "beginning 2027" as timing.
Precedent suggests a gap between gazette and commencement. The previous increase was reported to have been gazetted in late 2020 and to have taken effect in September 2021, although that timeline comes from secondary reporting. Creditors should not assume the change applies from 1 January 2027 until the amendment says so.
What it means if you are owed RM100,000 to RM150,000
This is the band most affected. If an individual owes you more than RM100,000 but less than RM150,000, bankruptcy is available today and may not be available once the amendment commences. In practical terms:
- Check your paperwork now. Bankruptcy normally rests on a final judgment. If you do not have one, the litigation stage comes first, and that takes time.
- Do not treat bankruptcy as the goal. It is leverage. Most debtors who receive a bankruptcy notice look for a settlement, because bankruptcy restricts travel, business and borrowing.
- Watch for transitional rules. The amending law may say whether petitions already filed continue under the old threshold. Until the text is published, nobody can say.
What it means if you are owed less than RM100,000
Nothing changes for you: bankruptcy was already unavailable for a single debt below RM100,000. Your routes are enforcement of a judgment, such as garnishee orders, a writ of seizure and sale or a judgment debtor summons. Our guide to recovering a debt below the bankruptcy threshold walks through the options.
What does not change
- The debt itself. A higher threshold does not cancel or reduce any debt. Reporting by Fintech News Malaysia and The Edge notes that other recovery methods remain available.
- Company debtors. The section 466 statutory demand threshold of RM50,000 for winding-up a company is not mentioned in the speech. See our guide to winding-up a company over RM50,000.
- Your right to sue. Civil claims, judgments and enforcement are unaffected.
The wider Budget 2027 picture
The same paragraph of the speech expands the Second Chance Fast Track Policy to more groups, including caregivers of family members with disabilities, chronic patients, senior citizens, gig workers and people with irregular income, and says automatic discharge will continue to be strengthened. We cover both in Second Chance Policy expanded: what creditors should expect and automatic discharge under section 33C.
The direction of travel is clear: individual bankruptcy is becoming harder to reach and quicker to leave. For creditors, that shifts weight towards earlier action, better security and recovery against companies rather than individuals where you have a choice. Our article on individual vs company debtors sets out that choice.
What to do this quarter
- List individual debtors who owe you more than RM100,000.
- For each one, check whether you hold a judgment, and how old the debt is.
- Run the figures, including interest and costs, through our debt claim calculator.
- Decide case by case whether a bankruptcy notice, enforcement or a negotiated settlement gets you paid fastest.
To follow the legislative steps from announcement to commencement, see when will the RM150,000 threshold take effect.
Frequently asked questions
What is the bankruptcy threshold in Malaysia now?
RM100,000. Budget 2027 announced a rise to RM150,000 beginning 2027, but as of 16 October 2026 no amending law has been gazetted, so RM100,000 still applies.
When will the RM150,000 threshold take effect?
The Budget speech says only "beginning 2027". The exact date will be set by the amending law or a commencement order, which has not been published yet.
Does the new threshold cancel debts under RM150,000?
No. The debt remains fully payable. Only the bankruptcy route becomes unavailable for smaller debts; suing and enforcing a judgment are unaffected.
Does Budget 2027 change the RM50,000 winding-up threshold for companies?
No change to the section 466 Companies Act 2016 threshold was announced in the speech or reported in coverage.