Debt-ridden young adults seek professional help on money management
PETALING JAYA: They are young and affluent but poor in managing their finances.By the time they’re 30,they are so debt-ridden they have to seek professional help to get out of bankruptcy.Credit Counselling and Debt Management Agency (AKPK) corporate affairs and communication head Devinder Singh said 15% of the more than 39,600 people enrolled in its debt management programme are below the age of 30.
He said many young adults risk being declared bankrupt because of credit card overspending and failing to observe basic rules in sound financial management.
Under the Bankruptcy Act 1967, bankruptcy action could be initiated against those owing as low as RM30,000.Devinder said people tend to default on payments due to poor financial planning and lack of control in credit card usage.“Those having problems settling their debts should seek early help before compound interest takes a toll on them,” he advised.
Voicing similar concern over the alarming increase of young adults being declared bankrupt, Fomca chief executive officer Datuk Paul Selvaraj agrees that most of them are in trouble because of mismanagement of credit cards.“Once declared bankrupt, life would be very tough because their names would be blacklisted in the Central Credit Reference Information System (CCRIS) database,” he said, adding that their applications for loans would be automatically rejected.Paul said many young adults were trapped in debt because they lived beyond their means.“When these youths are just starting out, they are highly impressionable and are easily influenced by friends’ lifestyles.“They generally do not manage expenses properly, thus allowing credit to accrue over time,” he said.
He also said brand-conscious youths rarely take affordability into account.“They do not feel the pinch when they swipe credit cards, but they will feel the pain at the end of the month,” he added.