Nearly all bankruptcy cases involving civil servants recorded nationwide this year are linked to personal borrowing, with some individuals owing more than RM4 million, according to the Insolvency Department.
Selangor Insolvency director Tengku Intan Suraya Tengku Ismail said 197 out of 200 bankruptcy cases involving civil servants recorded in the first four months of this year were caused by personal loans and financial commitments.
She said four of the cases involved debts exceeding RM4 million, believed to include business loans or situations where individuals had acted as guarantors for company borrowing.
“The remaining cases involved debts ranging from RM100,000 to RM4 million. This reflects a worrying level of indebtedness and suggests financial instability among Malaysians,” she said during a programme on financial literacy, bankruptcy awareness and the second chance policy, as reported by Kosmo.
Tengku Intan Suraya said most bankrupt civil servants came from the support group, mainly aged between 35 and 40, and had taken on significant loans more than a decade after entering public service.
She added that the majority of cases involved men, who typically serve as the main income earners for their families.
National data shows around 70 per cent of bankruptcy cases involve male individuals.
Other contributing factors include housing loans, vehicle financing and credit card usage to cover daily expenses.
She also noted cases of “debt cycling”, where individuals take new loans to settle existing ones, further worsening their financial situation.
Tengku Intan Suraya stressed the importance of financial awareness to prevent civil servants from falling into excessive debt.
She said Sarawak recorded the highest number of bankrupt civil servants at 23 cases, followed by Melaka with 22 and Selangor with 18.
On teachers specifically, 46 were declared bankrupt during the same period, with Melaka recording the highest number at 13 cases, while Selangor recorded two.
She added that collaboration with various agencies is ongoing to improve financial education and prevention efforts.
Under the second chance policy, about 10,000 individuals in Selangor have been released from bankruptcy status between October last year and March this year.
