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.

19 February 2004. It was a proud date for my family. It was the date on the flight ticket for me, Aliff*, the eldest son in my family, to leave Bintulu, Sarawak to move to the big city, Kuala Lumpur. Then 26 years old, I’d gotten a job as an auxiliary policeman (Polis Bantuan) in KL, where I’d be stationed at an important government building. Getting this job in Semenanjung, as we Sarawakians call Peninsular Malaysia, was a big deal — I wouldn’t just be making a better life for myself. I’d also be sending money back home to my single mother, who raised me and my siblings all by herself.

As a Polis Bantuan, I’d also be classified as a civil servant. I felt proud that I could work for the government and like many other Malaysians, still believe the government is a respected place to work. Little did I know that people sometimes take advantage of civil servants because of the steady salary we get… It’s now May 2021 and I’m turning 44 years old. I knew that moving to Semenanjung would change my life, but I didn’t think my life would get worse.

*Name has been changed


Financing my new life

I started work right away when I reached KL, even before having a permanent place to stay and my own transport to get around. So, I needed to find a home and buy a motorbike. While looking for somewhere to live, I got a short term rental of 2 weeks before I found a permanent place. That gave me 2 weeks to find a home! When I was looking for a place to stay, I didn’t realise the main thing you need when renting: the deposit. I had no idea you needed to pay at least 2.5 months of rent as a security and utility deposit. I started to stress out. My hope of a better life was getting smaller before it even began. The little money I’d brought from Bintulu was already running out. There was no way I could borrow that much money for the deposit from my family or friends.

The next difficult thing I came across was getting a motorbike. I’d planned to get a loan which I’d pay off every month using the salary from my new job. But I needed to show the bank 3 months of pay slips, which I didn’t have yet. So, my loan application was rejected. On my third day of work, I spoke to my workmate about my problems. We’d become friends quickly because he was from Sarawak, too. He told me not to worry. Since we were government employees who weren’t expected to ever lose our jobs, we could get loans from a credit cooperative which would be approved easily. The monthly repayments would be taken straight from our salary, guaranteeing the cooperative that the loans would be paid every month, as long as we kept our jobs.


Why I started taking loans

So, right after I started working, I took my first loan of RM5,000 from a credit cooperative. The loan period was 2 years. I’d be repaying RM245 a month. I didn’t know much about loans and debt back then. All I thought was with RM5,000 in my pocket, I could buy a motorbike for RM2,500, pay my rental deposit of RM1,000, and still have some balance left over. With my RM1,300 salary, I didn’t think paying RM245 every month for the loan was a big deal.

For 3 years I rented the same room and rode the same bike. I was then making RM1,700. But, I wasn’t keeping track of my spending. I also ended up taking on more loans to pay for bike repairs and some other spending. So, sometimes I didn’t have enough money to repay my loans at the end of the month.


How my debt grew

Every day at the place I worked, there would be banking agents offering loans to my colleagues and I. It was always the same story: big amounts, easily approved, not much documentation needed. All because we were civil servants who everyone thought would keep our jobs forever. I always turned down the loans because I didn’t think I needed the money. But then, my mother got sick and needed heart surgery. She didn’t have insurance and needed my help to pay for her treatment, which was going to cost RM20,000. So, I finally decided to take a loan from the agents who were always hanging around my workplace.

At first, I thought I’d take a RM30,000 loan. I planned to use it to pay for my mother’s surgery. I was also going to use the balance to pay the bank fees, my cooperative loans, and other loans that I had. Then, I’d just have one loan to repay every month. So, when I talked to one of the bank agents, he said I’d have to take a loan of at least RM134,000 to pay off all my existing loans that I have and still get at least RM25,000 in hand.

I didn’t wonder why I’d only get that much money from such a big loan. I was actually more worried my loan wouldn’t be approved. After all, I only earned RM1,700 at the time. So, by the time the agent called me a few weeks later to tell me my loan was approved, all I could think about was that I’d have enough to pay for my mother’s surgery, my other expenses and still have some money left over. It only occured to me much later, with monthly repayments of RM1,000 towards the new loan, it would be tough for me to live on the balance of RM700.


Why I stopped paying my loans

A week after I got my loan, I took leave from work and got on a flight back to Bintulu to help take care of my mother. I was proud to be able to pay for her surgery. But, my mother didn’t get better. After her surgery, she had a stroke and couldn’t walk anymore. I had to take more time off work, until I ended up using all my annual leave. Since I needed to stay in Bintulu to take care of my mother, my boss advised that the best thing for me to do would be to quit my job. Without a job, I couldn’t pay for my loan anymore. I thought I had problems before, when I didn’t have enough money to pay for my rental deposit, motorbike and later my mother’s surgery. But when I stopped repaying my loan, that’s when my real problems started…

After resigning from my job to stay in Bintulu with my mother, I only had a few thousand ringgit left from my RM134,000 loan. It was the only money I had left to live on. I’d already used most of the loan to pay for my mother’s medical bills and repay some other loans. In just a few months, I completely finished the money from my loan. And since I looked after my mother all day, I could only do some odd jobs around our neighbourhood. To top it all off, I hadn’t been paying for my loan since I quit my job. So, I wasn’t just unemployed and making very little income, I was also in a lot of debt which I wasn’t repaying. My mother eventually passed away 3 years after I went back to Bintulu. I decided to go back to KL to try and rebuild my life. That’s when I found how much financial trouble I was really in.


Have I been declared bankrupt?

Back in KL, I was nervous that I might be blacklisted because I hadn’t been paying my loan. I also found out that my bank account had been frozen. My friend had loaned me some money by depositing it into my bank account. But when I went to withdraw the money, I couldn’t. That’s when I realised that my situation might be worse than I thought. I wondered if I’d even been declared bankrupt. But I was too scared to check with the bank. Although I thought I’d try and get my job back as a Polis Bantuan, I decided not to because of my financial situation. I was afraid the authorities would find me and I wasn’t sure what they’d do to me. I finally ended up getting a job with a security company. I asked them to pay me in cash so I wouldn’t have to deal with any banks. Even then, I only made RM1,900 a month, which was just enough to support my family, so I continued to avoid repaying my loans.

I’ve now been working as a security guard for 10 years. One day, my boss asked for my bank account information. The company was going to transfer some money to all the staff, as a gift. I told him I didn’t have a bank account because of my debt problems.

He alerted me that because so much time had passed, my debt had probably grown much more due to interest and other late payment charges. I freaked out! I thought I might be declared bankrupt, but I didn’t realise my debt would keep growing and growing!


Getting help with my debt

My boss advised me to go online and get my credit report by registering with CTOS, the credit reporting agency, to understand exactly how much I owed and find a way to settle my debt. Through CTOS, I was shocked to find out that I actually had 5 loans and owed a total of RM271,000. In the 13 years since I took my loan, my debt had become more than 140 times my monthly salary! On top of this, although I hadn’t been declared bankrupt yet, one of the banks I borrowed from had started the bankruptcy process against me.

CTOS advised me that the best option was to speak with each of my lenders to find a way to settle my debt. They said I might also have to get into a repayment programme to settle my loans and stop the bankruptcy process. By now, the bank I had taken the loan of RM134,000 from had sold it to a debt collection agency. Usually when a bank can’t collect loan repayments for a long time, they sell the loan to debt collection agencies. The banks then make some money from the unpaid loan, and the debt collectors make money when eventually, borrowers settle the loans with the debt collectors. So, since my loan had been sold, I couldn’t deal with the bank anymore and had to discuss directly with the debt collector.

When it was sold, the value of the loan had become RM221,000 from RM134,000. At my first meeting with the debt collector, they offered a discount on the amount I owed, bringing it down to RM78,000. But since I couldn’t afford to pay that amount, I kept negotiating with them. Finally, we agreed to bring the amount down to RM37,000. The debt collector had previously offered a monthly instalment plan of RM250 which would have totalled to RM50,000. But thankfully, I was able to come to an agreement to pay it off in a lump sum and that’s how the debt collector agreed on the lower amount. But that wasn’t the end of my problems.

I had 3 other loans for my motorbike, electronics and furniture with three different lending companies. The loan balance for all three were quite small, so after dealing with the companies directly, they agreed to reduce some of the interest I had to pay. I could then settle the loans in full. Under the advice of CTOS, I spoke to AKPK about another RM8,000 personal loan that I had from a different bank. It had since grown to RM15,000. So, AKPK advised me to join their debt management programme and restructure the loan to make smaller monthly repayments. I’m still waiting for the bank to let me know if they will reduce the amount of my loan.

I also had a loan of RM1,600 from a licensed moneylender that had grown to RM19,839 with interest. But since AKPK only deals with bank loans, I needed to speak to Kementerian Perumahan dan Kerajaan Tempatan (KPKT), which is in charge of licensed moneylenders, to help negotiate my loan with the moneylender. While discussing with KPKT, we continued discussions with the moneylender. We finally agreed for me to pay RM9,900 to settle the loan.

For the last 10 years, I’d been living in fear of my lenders and was always stressed knowing that I had debt I couldn’t repay. I was not able to take any loans to buy a house or even own a bank account. I was also worried about having to pay for my kids’ education and knew I wouldn’t be able to take a loan for that too. But now that I’ve settled some and have a plan to repay the rest of my debt, I feel so much better. I can also have a bank account again, which makes life so much easier since most payments are now done online. I finally feel like I can get on with my life.

How I Avoided Bankruptcy – Part 1