Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

COVID-19 – LOAN REPAYMENT – CREDITWORTHINESS – TARGETED REPAYMENT ASSISTANCE (TRA) – METHODS – DEBT AVALANCHE – DEBT SNOWBALL

The Malaysian government has announced a three-month extension to the loan repayment moratorium for individuals who have lost their jobs and yet to find new employment during the Covid-19 pandemic – the Targeted Repayment Assistance (“TRA”) Programme. This programme is to assist those who face difficulties in continuing their debts during the Covid-19 pandemic. But a loan is a loan. Sooner or later it needs to be paid. Otherwise the creditworthiness of the individual can be compromised.

 What is Creditworthiness?

  • Creditworthiness is what the lender will determine whether an individual is eligible for acquiring a loan before the lender approve any new borrowings to the individual.
  • Creditworthiness plays an important role in having the required loan applications approved.
  • Creditworthiness is a measure of how well an individual manages their debts.

Two (2) Distinct Strategies to Settle Outstanding Balances

  • Debt Avalanche method
  • Debt Snowball method

 Debt Avalanche method

  • Prioritizing debts with the highest interest rates.
  • Paying off debt starting from highest rate to lowest interest rate, regardless of balance.
  • Debt avalanche method involves making minimum payments on all debt, then using any extra funds to pay off the debt with the highest interest rate.

 Pros

  • For individuals with larger amounts of debt, the avalanche method can reduce the time it takes to pay off the debt.
  • End up paying less money overall – provided the individual stick with the payment plan as the individual do not skip a month or two of strategic repayments.

Cons

  • This method requires discipline and commitment to pull off.
  • Also, it requires constant amount of discretionary income.

 Debt Snowball method

  • Prioritizing smallest debt.
  • Paying off debts from smallest balance to largest balance, regardless of interest rates.
  • The debt snowball method involves making minimum payments in all debt, then paying off the smallest debts first before moving on to next smallest.

Pros

  • Builds motivation by settling debts fast.
  • Forces the individual to stay intentional about paying one bill at a time until the individual is debt-free.

Cons

  • End up incur more interest.
  • More expensive overall.
  • Can take longer time to become completely debt-free.

Consequences for Late Loan Repayment

  • The credit score of the individual will be affected.
  • The individual will be charged penalties.
  • The individual may be filed for bankruptcy by failure to pay off a loan timely.

Advice

  • If you are unable to tackle your debts by yourself, do seek help from recognised agencies that can help you come up with a debt management plan.
  • Make sure you go to a reputable organisation and not some unauthorised agent that claims to represent financial institutions.
  • The Credit Counselling and Management Agency or AKPK offers free advice and guidance to borrowers including options for debt restructuring.
  • There are other agencies, including Creador Foundation, which provides financial literacy education for low and middle income adults via Multiply.
  • Whatever your financial situation may be, take time to review it and safeguard your creditworthiness.
  • Prioritize your essentials and do not let your bill grow faster than you can pay them.

If you need any assistance for loan, please do not hesitate to log on to our website at https://yhalaw.com.my/secure-loan-application/.

Send us your details and we will get our professional mortgage specialist to understand your needs and apply loan for you.

Back to Latest Legal Updates

Recent Post

REGULATIONS – GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT 1947 ) – ARTICLE I

This legal update explores key provisions of the General Agreement on Tariffs and Trade (GATT 1947), focusing on Article I (Most-Favoured-Nation Treatment), Article II (Schedules of Concessions), Article XX (General Exceptions), and Article XXI (Security Exceptions). Article I mandates that any trade advantage granted by one contracting party to another must be extended unconditionally to all other parties. Article II ensures that imported goods from contracting parties receive treatment no less favourable than that outlined in agreed schedules, while also regulating permissible taxes and charges. Articles XX and XXI provide exceptions for measures necessary to protect public morals, health, security interests, and compliance with domestic laws. The provisions reflect the foundational principles of non-discrimination, transparency, and fair trade, while allowing for limited, well-defined exceptions. This summary is intended to provide a concise reference for businesses and legal practitioners involved in international trade law.

Read More »
3 April ,2025 No Comments

ROAD ACCIDENT – INSURANCE COMPANY STRIKES BACK: HIGH COURT OVERTURNS ROAD ACCIDENT CLAIM

When a motorcyclist claimed he was knocked down in an accident, the Sessions Court ruled in his favor, holding the other rider fully liable. But the insurance company wasn’t convinced. They appealed, arguing that there was no proof of a collision and even raised suspicions of fraud. The High Court took a closer look – and in a dramatic turn, overturned the decision, dismissed the claim, and awarded RM60,000 in costs to the insurer. This case is a stark reminder that in court, assumptions don’t win cases – evidence does.

Read More »
24 February ,2025 No Comments

CHARTERPARTY – LIEN ON SUB-FREIGHTS: CLARIFYING OWNERS’ RIGHTS AGAINST SUB-CHARTERERS

In Marchand Navigation Co v Olam Global Agri Pte Ltd and Anor [2025] 1 Lloyd’s Rep 92, the Singapore High Court upheld the owners’ right to enforce a lien on sub-freights under Clause 18 of the NYPE 1946 charterparty, ruling that the phrase ‘any amounts due under this charter’ was broad enough to cover unpaid bunker costs. Despite an arbitration clause between the owners and charterers, the sub-charterer was obligated to honor the lien, as it was not a party to the arbitration agreement. This decision reinforces that a properly exercised lien on sub-freights can be an effective tool for owners to recover unpaid sums, even in the presence of disputes between charterers and sub-charterers.

Read More »
24 February ,2025 No Comments

SHIP SALE – LOSING THE DEAL, LOSING THE DAMAGES? THE LILA LISBON CASE AND THE LIMITS OF MARKET LOSS RECOVERY

In “The Lila Lisbon” [2025] 1 Lloyd’s Rep 101, the court ruled that a buyer cancelling under Clause 14 of the Norwegian Salesform Memorandum of Agreement is not automatically entitled to loss of bargain damages unless the seller is in repudiatory breach. The case clarifies that failing to deliver by the cancellation date does not constitute non-delivery under the English Sale of Goods Act 1979, as the clause grants the buyer a discretionary right rather than imposing a firm obligation on the seller. This decision highlights the importance of precise contract drafting, particularly in ship sale agreements, where buyers must ensure that compensation for market loss is explicitly provided for.

Read More »
24 February ,2025 No Comments

CRIMINAL – KIDNAPPING – NO ESCAPE FROM JUSTICE: COURT UPHOLDS LIFE SENTENCE IN HIGH-PROFILE KIDNAPPING CASE

A 10-year-old child was abducted outside a tuition center, held captive, and released only after a RM1.75 million ransom was paid. The appellants were arrested following investigations, with their statements leading to the recovery of a portion of the ransom money. Despite denying involvement, they were convicted under the Kidnapping Act 1961 and sentenced to life imprisonment and ten strokes of the whip. Their appeal challenged the identification process, the validity of the charge, and the admissibility of evidence, but the court found the prosecution’s case to be strong, ruling that the appellants had acted in furtherance of a common intention and were equally liable for the crime.

Read More »
24 February ,2025 No Comments
en_USEN
zh_TWZH ms_MYMY en_USEN
× Contact Us