PETALING JAYA: In Malaysia, old debts can’t haunt you forever.
Thanks to the Limitation Act, many debts vanish after six years, unless the debtor acknowledges them.
And any attempt to revive these “time-barred” debts through intimidation or coercion is unlawful.
Federation of Malaysian Consumers Associations (Fomca) vice-president Datuk Indrani Thuraisingham said that Fomca, through the National Consumer Complaints Centre, frequently receives reports of harassment over old debts, some dating back nearly 30 years.
“They usually involve threats of blacklisting, misleading instalment plans and a lack of transparency when banks sell old debts to third-party collectors,” she said.
She said Malaysians should know their rights in the face of aggressÂive debt collection practices.
“We must know that under the Limitation Act, most debts become legally unenforceable after six years unless legal action has been taken within that period.
“For example, if a loan was given in 2010 and unpaid, the creditor can’t sue in 2020 unless the debtor acknowledged the debt, which resets the six-year period,” she told The Star.
When contacted recently, Bank Negara Malaysia said its “Disposal and Purchase of Impaired Loans/Financing” guidelines ensure that the sale of impaired or non-performing loans respects borrowers’ rights.
It said non-bank buyers of such loans must transparently disclose their debt recovery commitments, including contact details for queries and complaints, and comply with syariah requirements where applicable.
“To protect consumers, Bank Negara mandates that debt collectors handle complaints fairly and promptly, with clear resolution procedures.
“Collectors must adhere to fair practices, prohibiting intimidation, harassment and deception, and must carry authorisation cards. Non-compliance may lead to regulatory action.”
Indrani also noted that the newly passed Consumer Credit Act would enhance enforcement and consumer protection by establishing a statutory body to oversee all credit-related matters.
“It introduces stringent regulations on debt collection agencies, prohibiting harassment and empowering the Consumer Credit Oversight Board to monitor and enforce compliance.
“This aligns Malaysia with global best practices,” she said.
Urging consumers to be vigilant, Indrani said consumers must never be coerced into paying debts that are legally expired.
“The laws provide safeguards through the Limitation Act and the new Consumer Credit Act.
“Fomca urges regulators to strictly enforce existing laws rigorously and for consumers to confidently exercise their rights.”
Financial planner Linnet Lee advised ignoring demands for payments on debts past the six-year mark and warned against even small payments, which can reset the limitation period.
“Don’t make any form of payment, even a small amount that the collector asks for.
“Keep a record of all communications from the collector and lodge a complaint with Bank Negara if harassed by the bank or its agent,” she said.
Accounts and tax expert Christine Koh noted that threats of home seizure or account freezing do not indicate an agreement to pay.
“Paying because of pressure shouldn’t be seen as willingly paying instalments,” she said.
Koh noted that the six-year time bar is a reasonable time frame for creditors to pursue debts.
“Debtors should be aware of this limitation, request written proof of debts and seek legal advice before making payments.”
