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Personal loans remain the leading cause of bankruptcy among Malaysians
Statistics from the Insolvency Department show that 2,944 Malaysians fell into bankruptcy last year due to personal loans, up from 2,776 cases the year before.
Between 2021 and 2025, personal loans accounted for 13,900 cases, or 47% of all bankruptcies.
The second most common cause is business loans, representing nearly 20% of cases over the same period.
Last year, 1,121 individuals were declared bankrupt due to business loans.
Vehicle purchases and housing loans rank third, each contributing around 8% of total cases over the past five years.
A total of 2,499 individuals were declared bankrupt due to housing loans, while 2,467 cases were linked to vehicle purchases.
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Image via New Straits TimesFrom guarantor to bankrupt
The statistics also reveal a troubling trend of Malaysians falling into bankruptcy simply by acting as guarantors.
Over the five-year period, 1,427 cases were linked to guarantorship, the vast majority involving corporate guarantors (1,406 cases), with only 21 cases linked to social guarantors.
Both categories show an upward trend.
Last year alone, 561 corporate guarantor cases were recorded, up from 383 the year before, while social guarantor cases rose to 21 from 17.
Directors declared bankrupt over unpaid EPF
Another emerging pattern involves company directors declared bankrupt for failing to contribute to Employees Provident Fund (EPF) contributions, with 522 cases over the past five years.
Last year, 194 cases were recorded, a sharp increase from 77 cases the previous year.
