Social guarantors can now breathe a little easier with the passing of the new amendments in the Bankruptcy (Amendment) Bill 2016.<\/p>\n
The new law was passed in the Dewan Rakyat yesterday, and one of the key points in the amendment is that social guarantors will no longer be made a bankrupt if the borrowers default on their debts.<\/p>\n
Social guarantors are those who provide a guarantee for an education loan, hire-purchase transactions for personal or non-business use, or a housing loan for personal dwellings, and do not stand to profit from it.<\/p>\n
However, this does not clear them from other forms of legal debt recovery.<\/p>\n
\u201cSocial guarantors cannot be declared bankrupt but other action can be taken by creditors.<\/p>\n
\u201cFor example, they could freeze an account or seize the property (of the social guarantor),\u201d said Minister in the Prime Minister\u2019s Department Datuk Seri Azalina Othman Said during the debate on the Bill.<\/p>\n
\u201cIn previous cases, many social guarantors were made bankrupt. We want to bring new changes in the process and a system which is fairer to social guarantors,\u201d Azalina was quoted by the English-language daily, The Star<\/em>.<\/p>\n Borrowers will still be bound by their legal duties to repay their loans, even with the new changes, she cautioned.<\/p>\n The amendments would only provide better protection for social guarantors as they have always been the victims when declared bankrupts.<\/p>\n Creditors must be able to prove to the court that all steps have been taken to recover the loan from the borrowers, she added.<\/p>\n Other than better protection for social guarantors, the amendments to the bill also include<\/p>\n