A true story of how a young man from Sarawak came to Kuala Lumpur for a better life, got buried in debt and is looking for a way out. The final part of a 3-part series. 

In the first two parts of this series, we got to know Allif who left Miri as a young man to work as a Polis Bantuan in KL. Aliff ended up taking on too many loans and had to take some complicated steps to help rebuild his life.

If Aliff’s story sounds like something you’re going through, or if you want to avoid getting into the same situation, read Part 1 to find out how Aliff faced challenges with managing his debt or click here to read Part 2 about his journey in dealing with his loans. 

In the final part of this series, we go through the 3 steps that you can take if you face difficulties managing your debt. 

Step 1 – Understand your situation

Why it’s important:To tackle your debt, you’ll first have to understand how much money you owe. 

How to start: You can find out how much money you owe and who you owe it to in your credit report. A credit report is like a report card on how well you’ve managed your finances.

You can get a free basic credit report from any Bank Negara Malaysia (BNM) branch, online (CCRIS) or from credit rating agencies like CTOS. 

A basic credit report will contain your personal information, and tell you how much you owe your lenders. It will also show any ongoing legal cases and your bankruptcy status.  

If you’d like a detailed report,  you can buy one from CTOS. A detailed credit report will tell you how much you owe your lenders, legal cases, bankruptcy proceedings, your banking payment history sourced from CCRIS Bank Negara Malaysia and your credit score. So a detailed report will give you a clear picture of your situation which would make it easier to decide where to start to tackle your debt. 

You should check your credit report regularly to make sure you’re on top of your finances. You could also sign up for a monthly or yearly subscription with companies like CTOS to get a monthly notification on any missed payments and a detailed credit report every 3 months. A general rule of thumb would be to check your credit report at least once in 6 months.

Step 2 – Getting help to tackle your debt 

Why it’s important: Tackling debt can be a confusing process, and you might not be sure what to do. Speaking to the relevant authorities can help make sure you make the right decisions in tackling your debt. 

We might try to avoid our lenders because we’re afraid of the actions that may be taken against us. But in fact, lenders will usually work with us to manage our repayments because they want  to get paid as well. 

How to start: Once you’ve figured out how much you owe your lenders, the next step is to speak to them. 

For bank loans

You can speak to your banks directly or with AKPK to discuss a repayment plan that you can afford. AKPK is the government agency set up by Bank Negara Malaysia to help Malaysians with their financial troubles relating to debt. 

i) If you have 1 bank loan

As a first step, AKPK will usually guide you on how you can speak to your bank to negotiate a repayment plan. If you can’t come to an agreement with your bank, AKPK will then step in to help you. 

ii) If you have more than 1 bank loan 

You could join AKPK’s Debt Management Programme. Under this programme, AKPK will help negotiate repayments for all your loans to a single amount that you can afford monthly.

Due to the economic slowdown from COVID-19, banks are now providing borrowers with more options to help manage their loan repayments. Click here to read more about the type of loan repayment assistance you could get. 

For loans from money lenders 

Speak to your money lender directly to try to negotiate your loan repayment. AKPK can’t help you negotiate your loans with money lenders because they don’t have the authority to do so.

Like in Alif’s case, money lenders are usually open to negotiating a repayment plan as they would rather recover some of the money they’ve lent you than to not get any repayment at all. 

Remember, money lenders can only charge you up to 18% in interest per year. So, if your money lender has charged you more or you believe you’re being treated unfairly, you can file a complaint with Bahagian Kawalan Kredit Komuniti under KPKT by sending them an email at bkkk@kpkt.gov.my or by calling them at 03-8000 8000. KPKT is the ministry that regulates moneylenders and pawnbrokers. 

If you’ve taken a loan from an illegal money lender on the other hand, you might have to go to the police for help as illegal lenders are not regulated by any government agency. 

Step 3 – Following your repayment plan

Why is it important? Repaying your debt will be the first step towards a debt free life. And when you know you’ve taken steps to tackle your debt, you’ll also feel less stressed and worried about your financial situation. So, it’s important to stick to your repayment plan to make sure you clear your debt and can move on to reaching your other financial goals!

How to start: A good way is to create a monthly budget. Once you know how much your repayments are, plan your expenses around them so that you make your repayments first before spending on anything else. You might have to cut out some of your wants until you’ve repaid all your loans. If you need help coming up with a budget, read our guide or use our monthly budget calculator.

Aliff’s story shows how easy it is for debt to become difficult to manage and what could happen if we ignore our debt. He learned from the information on Multiply that he needed to get help to manage his debt and how to go about it. Now, Aliff knows what he can do to improve his financial situation and hopefully make better financial decisions in the future. So, if you’ve been on a similar journey or have your own story to share, do get in touch with us at hello@multiply.org.my.