From Ed, a viewer who wrote in by email
Twenty years ago, Ed's father took a RM675,000 business loan in Ed's name; the business failed and Ed was made bankrupt. He was discharged in July 2024 and was told the system would take about 12 months to clear him. He is 41 and takes home RM4,700; after a car loan in his wife's name, RM1,200 rent, bills and the minimum payment on about RM30,000 of her credit card debt, the couple ends each month in the red, with no savings.
How can he rebuild his credit score, should he take a 20,000 ringgit personal loan at 20% to do it, or a 30,000 ringgit loan to clear his wife's cards, and how does he start over?
“just wait for 12 months”
Don't take the personal loan. Wait the 12 months, apply for a credit card when he can and use it responsibly, and meanwhile close the monthly gap by earning more and spending less. Borrowing at 20% to clear 18% card debt only moves the debt from one name to another.
Why
20% is a terrible rate
Housing loans cost about 4% and fixed deposits pay about 3.8%. A seven-year personal loan at 20% costs more than the credit card debt it would replace. Personal loans are easy to get because they are the most lucrative product for banks.
Credit is rebuilt by waiting
Keep the release documents from the insolvency department safe. Once the record clears, a credit card approval is the sign that banks trust you again; that is the time to start building a score.
Every expense is negotiable
Sean asks whether a cheaper room, an older car, ride-hailing in spare hours or a job for his wife could each add a few hundred ringgit, with every saving going to the card debt. When Sean was in trouble, he dropped his insurance and relied on public healthcare for a time.
Never lend your name
Don't take out a loan or stand guarantor for anyone, even family. Property investors should also carry life cover, such as MLTA or MRTA, so their loans don't pass to their heirs.
What to do
- Wait out the 12 months rather than borrowing to build a score.
- Pay more than the minimum on the card debt with every ringgit saved or earned.
- Look at a cheaper room, a cheaper car or extra work to close the monthly gap.
- Consider AKPK for the card debt if payments become impossible, knowing it freezes the cards.
- Ask for a promotion or a better-paid job once your record is clear.
Editorial Note: Summarised from Sean Tan's full episode. The quoted answer is in his own words; the rest is our paraphrase. Figures reflect the recording date, so check current rates and rules before acting on them.
ASKING SEAN #266 | JUST GOT OUT OF BANKRUPTCY
Sources & Verification Data
Summarised from Sean's full English captions for Asking Sean #266. The quoted line is verbatim; everything else is paraphrased. Figures are as stated in November 2024. The viewer wrote that the stress had left him thinking of ending his life; if you are struggling, Befrienders Kuala Lumpur offers free, confidential support on 03-7627 2929. The episode is sponsored by The Makeover Guys, a renovation company.
