HARDLY a day passes without newspapers publishing classifieds on bankruptcy cases. Between 2013 and 2017, over 100,000 individuals were made bankrupts. The statistics become grimmer if we take into account that 34 percent of them were between 35 and 44 years old. We are not talking about people who failed to pay loans running into millions but youth as young as 21 or just starting out in life. Daily an average of 41 young people aged between 21 and 40 are declared bankrupt.

And all mainly for bad debts due to hire purchase loans for cars, houses or credit cards worth as low as RM30,000. Things would have been worse if not for Bank Negara Malaysia's foresight in setting up the Credit Counselling and Debt Management Agency (AKPK) 11 years ago.

AKPK has helped tens of thousands of people. It counsels and gets to the root cause – usually poor financial planning – for young wage earners, who can hardly make ends meet especially in urban areas. These are the people who are battling with the high cost of living, failure or slowdown in business, high medical expenses and job loss. We have more reasons to worry with a revelation by the Malaysian Employers Federation that some 50,000 workers are expected to be retrenched this year.

Another important amendment is raising the debt threshold to RM50,000 at least for bankruptcy declarations from RM30,000 previously, a clause that caught many people especially friends and relatives who stood as guarantors.

Over the past four years, the courts cleared over 1,400 bankruptcy cases while some 12,400 more cases were annulled and another 46,000 discharged from bankruptcy. As of last December the agency has helped resolve about 15,000 cases involving debts worth RM617.4 million. And many of them get into financial distresses with their first huge commitment, their car instalment, as the majority with a salary of around RM2,000 having to fork the bulk of it just to service their car loans.

Most of the bankruptcy cases relating to non-payment of car loans could be avoided if more young people option to buy good second-hand vehicles that are cheaper than new ones. I know nothing like the thrill of driving a new car out of a showroom but this pleasure is short-lived and disappears once the car owner can't service his or her loans. It's time for all industry players to start thinking of making more affordable cars.

i. Discuss the major types of personal risk towards the increasing number of bankruptcy in Malaysia.

ii. From the identification of personal risk. Briefly explain TWO (2) methods of loss financing for risk management.