The other option is to skip the country

[Randy W]

I have often wondered about this. From the SCMP

 

China court approves personal bankruptcy ruling that could pave the way for further debt cases

• A court in Wenzhou, Zhejiang province, says a local man only has to repay 1.5 per cent of his 2.14 million yuan (US$300,000) of debt to creditors
• China is in the process of establishing personal bankruptcy rules amid a surge in the household debt-to-gross domestic product ratio

 

 

It did not specify how Cai, who has a monthly household income of around 8,000 yuan (US$1,120), amassed the debt.

“He has a 1 per cent equity stake in a machine tool company, and his paid-in capital to the company is 5,800 yuan. He has a damaged motorcycle and a very small amount of [bank] deposits,” the local official newspaper, the Wenzhou Daily, reported, citing the court ruling. “In addition, his wife has been suffering from high blood pressure and kidney disease for many years, resulting in a huge medical bill, and his child is still in college. The whole family’s income just couldn’t make ends meet and he is clearly unable to repay the huge debts.”

The landmark case took place at a time when the government is trying to set up a nationwide legal framework to handle a growing number of individuals who are unable to repay their debts.

At the end of June, China had 14.43 million people who were listed by the courts as “persons who have lost credibility”, the equivalent of just over 1 per cent of the total population, official data showed, with most placed on the blacklist due to unpaid debts.

Cai can resume his credible social status three years after paying back the agreed amount, although until then, he is not allowed to travel in business or first class on the high-speed railway network, serve as legal representative for any business entity, while he must seek special permission if he wants to travel abroad, the court ruled.

 

 

 

 

from the Leiden Law Blog

 

The first personal bankruptcy case in China

It has been long held in China that a debt must be repaid, particularly the debt of a father by his son. Is this going to change? What does the first personal bankruptcy case in China tell us?

 

 

At present, there is no concrete personal bankruptcy law in China. The current 2006 Enterprise Bankruptcy Law (EBL) only applies to enterprises, including legal persons and unincorporated organisations [1] but excluding natural persons. The discussion about the need to include legislation in China’s bankruptcy law related to natural persons (consumers), however, has been ongoing. Such legislation would rather go against the long-held Chinese tradition that a debt must be repaid; particularly, the debt of a father must be repaid by his son (父债子偿). In June 2019, the Supreme Court issued The Guidelines for People’s Courts on Enforcement Work (2019-2023) (《人民法院执行工作纲要》), confirming the attempt to establish a personal bankruptcy system. In July 2019, the National Development and Reform Committee under the State Council, together with 13 other government departments jointly issued The Reform Plan for Accelerating the Improvement of Market Entity Exit System (《加快完善市场主体退出制度改革方案》), which stated the intention to establish a personal bankruptcy system, primarily associated with joint guarantee cases. Subsequently, Wenzhou became the first trial place across the nation to deal with these cases. The Intermediate Court in Wenzhou published The Implementing Opinions on the Centralised Clean-up of Personal Debt (《关于个人债务集中清理实施意见》, hereinafter “Implementing Opinions”), which only take effect within the municipality of Wenzhou but formulate the guiding rule for resolving the present case. There are in total 44 articles in the Opinions. In the meantime, there are an additional 18 pending personal bankruptcy cases in Wenzhou.

 

 

 

 

 

[Randy W]

For years, progress on a personal bankruptcy law has stalled in the face of entrenched opposition. The events of the past two years may finally be enough to see it pass.

from the Sixth Tone on Facebook 
https://www.facebook.com/sixthtone/posts/3118361988482640

In Tough Times, China Needs to Act on Personal Bankruptcy
For years, progress on a personal bankruptcy law has stalled in the face of entrenched opposition. The events of the past two years may finally be enough to see it pass.

Quote

 

If public reactions to the Shenzhen case are any indication, however, there is still a long way to go before personal bankruptcy is widely accepted in China. Online, reports of the Shenzhen ruling led some to jokingly ask whether they still needed to pay their credit card debts. The popular response reflects both long-term institutional problems as well as cultural prejudices regarding personal bankruptcy. There are very few cases of legally sanctioned debt forgiveness in Chinese history. Although the People’s Republic trialed a law on corporate bankruptcy beginning in 1986 and later formalized it in 2007, the right to bankruptcy has never been granted to natural persons.

Between the nationalization of industry in the early 1950s and the advent of “reform and opening-up” in the late 1970s, this was less of a problem. Since the economic reforms of the 1980s, however, many Chinese individuals’ and families’ debts have accumulated in tandem with their assets. Reforms to the non-state sector and especially financial institutions have made loans more accessible to regular individuals, and people are saving less while increasing their investments, spending, and debts. Leveraging — investing with borrowed capital — has become common practice among entrepreneurs and stockholders, leaving them vulnerable to fluctuations in the stock and bond markets, while the end of workplace-provided public housing coupled with a booming real estate market and rising consumerism is crushing many ordinary Chinese under a mountain of mortgage and credit card debt.

These problems have grown more acute over the past decade, as largely unregulated informal and digital finance services with low thresholds and high interest rates flourished nationwide. As the number of people saddled with insurmountable debt continued to rise, so too did the frequency of debt-related tragedies: murders, suicides, and organ sales.