The debtor has to be declared a bankrupt by an order from high court. Before one is made a bankrupt by the court, creditors will first file a civil suit against the debtor to declare him insolvent. This process can take a year.
When the debtor has been deemed insolvent, a bankruptcy petition can be filed against him for amounts totalling rm3,001 and above.
While it is the creditor who usually initiates the proceedings, the debtor can also initiate the legal process to declare himself a bankrupt with any amount owed. Either way, this legal process can take another two to three months. The debtor is officially a bankrupt when he is served with the adjudication order and receiving order (AORO)
Source: Personal Money Magazine, Nov 2013