First case of personal debt liquidation! 4,000 debts per month, 2.14 million debts, and finally 32,000 repayments

category:Finance
 First case of personal debt liquidation! 4,000 debts per month, 2.14 million debts, and finally 32,000 repayments


How did this work? Some people also questioned, Is it natural to pay off debts?

Wenzhou finishes the first case of personal debt liquidation in China

2.14 million liabilities will eventually require 32,000 more

According to Wechat Public No. Wenzhou Court, on the morning of October 9, the Wenzhou Intermediate Peoples Court of Zhejiang Province jointly held a press briefing with the Peoples Court of Pingyang County to inform Cai, a bankrupt enterprise shareholder in Wenzhou, of the case of debt centralized liquidation settled by the Pingyang Court.

Photo Source: Wechat Public Number Wenzhou Court

Brief introduction of the case

The debtor, Cai Mou, is a shareholder of a bankrupt enterprise in Wenzhou. The valid judgment document confirms that Cai Mou should be jointly and severally liable for the debts of more than 2.14 million yuan of the bankrupt enterprise.

According to the investigation, Cai only holds 1% equity in a machinery company in Ruian City, where he is currently working (the actual investment is 5,800 yuan), and has an abandoned motorcycle and sporadic deposits. In addition, Cai earns about 4,000 yuan a month from the company, and Hus spouse earns about 4,000 yuan a month.

Photo Source: Wechat Public Number Wenzhou Court

On August 12, 2019, the Pingyang Court decided to file a case for Cais centralized debt liquidation and appointed Wenzhou Chengda Accounting Firm as the administrator. Following the announcement of the declaration of creditorsrights and the announcement of the first creditors meeting issued by the administrator, the Pingyang court held the first creditorsmeeting of Cais debt centralized liquidation on September 24.

Photo Source: Wechat Public Number Wenzhou Court

Four creditors participated in the voting. On the premise of fully understanding the debtors economic situation and confirming the debtors good faith, one of the creditors voted to adopt the above-mentioned liquidation scheme, agreed to reserve the necessary living expenses and medical expenses for the debtor, voluntarily waived the right of recourse to its remaining debts, and agreed that the debtor could resume after three years from the date of the completion of the liquidation scheme. Its personal credit.

On September 27, the Pingyang court issued a restraining order on Cai Mous behavior and ended the execution of Cai Mou in the case involved in this liquidation. Finally, the case was successfully concluded.

Photo Source: Wechat Public Number Wenzhou Court

Chen Weiguo, member of the Party Group of Wenzhou Intermediate Court and director of the Executive Board, commented on the case, pointing out that Cais case of centralized debt liquidation concluded by the Pingyang Court was the first case of personal debt liquidation with substantive functions of personal bankruptcy and equivalent procedures in China after the Supreme Court proposed to study and promote the establishment of the personal bankruptcy system.

Under the Individual Bankruptcy System

Is it natural to pay off debts?

More than two months ago, the news that the personal bankruptcy system will be pilot in the second half of the year triggered a heated debate among the whole people.

On July 16 this year, 13 departments, including the National Development and Reform Commission, jointly issued the Reform Plan for Accelerating and Improving the Exit System of Market Subjects.

On July 26, the responsible person of the Finance Department of the National Development and Reform Commission (NDRC) said in response to a reporters question on the Reform Plan for Quickening and Improving the Exit System of Market Subjects, that the reform plan proposed to step by step promote the establishment of a natural person bankruptcy system. Two points need to be emphasized:

First of all, the personal bankruptcy system is to provide debt restructuring opportunities for individuals who are in serious financial difficulties but honest and trustworthy, to promote debtors to continue to innovate, and to prevent the debt risk of the residential sector and maintain social stability, provided that no one can evade the debt maliciously.

Secondly, the establishment of personal bankruptcy system is a systematic work involving a wide range of areas and high complexity, which needs legislation to be carried out first and then gradually. The current key task is to promote personal bankruptcy legislation on the basis of fully building social consensus.

It is understood that the centralized liquidation of personal debts, which Wenzhou took the lead in the whole country, is an important pilot project for the establishment of personal bankruptcy system in China. On September 5, the Wenzhou Intermediate Court issued the summary of the first joint meeting of government and courts in the country, which has the same function as the individual bankruptcy system. On September 11, Wenzhou Intermediate Court Joint Municipal Finance Office notified about the pilot work of centralized liquidation of personal debt, and published the Opinions on the Implementation of centralized liquidation of personal debt of Wenzhou Intermediate Court. Since the pilot project of centralized liquidation of personal debt has been carried out in an all-round way, the Wenzhou court system has initiated liquidation procedures for 19 selected specific cases.

As for the new thing of personal bankruptcy system, what we are most entangled with is whether the money owed after bankruptcy should be paid back or not.

As long as the basic principles of the system are clear, such a problem is very clear: once the personal bankruptcy is implemented, it means that the debtor has transferred all property rights. The property rights here include not only the ownership of the existing assets, but also the ownership of the income during the bankruptcy period. After the bankruptcy period, the debtor can restore the normal persons identity.

In the market economy, bankruptcy is an indispensable system and an effective means to optimize the allocation of resources.

When an enterprise fails to pay its debts and can not continue to operate, bankruptcy means the end of its life. After bankruptcy, valuable assets can be sold to repay its debts. The creditor-debtor relationship attached to the enterprise will end with the bankruptcy of the enterprise. When the market is cleared, capital, manpower, technology and other factors of production can be put into other enterprises to continue to create value.

Individual participation in market activities can be regarded as the most micro-enterprise. Compared with enterprise bankruptcy, individual bankruptcy system also has a social significance: individuals and their families take unlimited responsibility for debt at the cost of all their own property, and they still have the opportunity to start a new life in the future.

Take Hong Kong as an example, the bankrupts bankruptcy period is 4/5 years. For housing, the bankrupt can live in all his property for up to 12 months. After the expiration of the bankrupts term, the bankrupt must retire and deliver to the trustee. The trustee will cash it in and pay off the debts. In everyday life, the bankrupt should pay all his income to the trustee for repayment of debts, save the necessary expenditure on daily life, and the bankrupt should not engage in any high-consumption activities. When the credit consumption exceeds HK$100, the bankrupt should inform the other party of his bankruptcy status in advance.

In Chinas current economic and financial environment, the personal bankruptcy system has two other important meanings.

On the one hand, it will completely change the concept of creditors rights and debts.

Debt repayment and father and son repayment are the basic tenets of Chinese people for debt relations, that is, the relationship between creditors rights and debts can not only continue to the end of personal life, but also to future generations. For debtors, if they are truly insolvent and expected to be unable to repay in the future, it will be difficult to avoid the tragic events that lead to extinction once they are forced by external forces such as violent debt collection. The individual bankruptcy system is to fundamentally break the Chinese societys recognition model of the creditor-debtor relationship.

For creditors such as financial institutions, without the debtors promise of life-long repayment, they need to adjust from product design to interest rate setting, from risk management to debt collection, instead of rushing to lend after obtaining debtors promises of set-off/pledge and unlimited joint and several liability, thus reducing their motivation for aggressive lending and reducing the frequency of related debt disputes.

On the other hand, it is conducive to encouraging individual entrepreneurship and innovation.

Although the development of venture capital in China is very fast, we should also see that venture capital is still concentrated in those enterprises founded by the top talents, and most of them still need to rely on traditional debt financing to obtain the necessary funds for development.

However, entrepreneurs lack long-term stable cash flow as evidence of repayment ability. The financing behavior of enterprises often turns into the personal loan of entrepreneurs. The entrepreneurs not only need to provide personal property and other assets as security, but also need to assume unlimited joint and several liability, even to the whole family. The establishment of an individual bankruptcy system undoubtedly provides entrepreneurs with a guarantee that even if the worst happens, everything can come back after a difficult bankruptcy period. Individual bankruptcy system is a systematic project, involving a wide range of aspects. For debtors and creditors, they need to change their minds, familiarize themselves with new rules and clarify their rights and obligations; for courts, they need to deal with the sudden outbreak of long-backlog of bankruptcy claims. Anyway, as long as this system comes to the ground, it will be a kind of progress for the whole society. Daily Economic News Comprehensive Wenzhou Court, Every Jing Network (author Du Hengfeng), the official website of the National Development and Reform Commission and other sources of this article: Daily Economic News Responsible Editor: Wang Xiaowu_NF

However, entrepreneurs lack long-term stable cash flow as evidence of repayment ability. The financing behavior of enterprises often turns into the personal loan of entrepreneurs. The entrepreneurs not only need to provide personal property and other assets as security, but also need to assume unlimited joint and several liability, even to the whole family. The establishment of an individual bankruptcy system undoubtedly provides entrepreneurs with a guarantee that even if the worst happens, everything can come back after a difficult bankruptcy period.

Individual bankruptcy system is a systematic project, involving a wide range of aspects. For debtors and creditors, they need to change their minds, familiarize themselves with new rules and clarify their rights and obligations; for courts, they need to deal with the sudden outbreak of long-backlog of bankruptcy claims. Anyway, as long as this system comes to the ground, it will be a kind of progress for the whole society.

Daily economic news synthesizes Wenzhou Court, MeiJing Network (author Du Hengfeng), the official website of the National Development and Reform Commission, etc.