Research On The Construction Of The Individual Bankruptcy Discharge System In China

For the lack of individual bankruptcy system in China,it is very unfavorable to properly handle the debts that cannot be paid off objectively,as well as protect the legitimate rights and interests of both creditors and debtors.This is also one of the external causes that leads to the problem of "Law Enforcement Difficulty" in judicial enforcement.In order to improve China’s current bankruptcy legal system,the individual bankruptcy system must be established quickly.The bankruptcy discharge system,as a unique system in it,is the foundation of building a complete individual bankruptcy system.It can motivate debtors to apply for individual bankruptcy,actively disclose property and repay debts,which is aimed at reducing creditors’ property losses and ensuring that their claims are fairly compensated.Moreover,it can take into account of the survival and development of debtors.Receiving the benefits of bankruptcy discharge,the debtors who are honest but unfortunate have a chance to resurrect in personal finance and achieve a new life.Therefore,the bankruptcy discharge system can provide a decent market exit method for individuals,especially entrepreneurs,who have fallen into a debt crisis due to entrepreneurial or investment failures,risk exposures,etc.in the increasingly competitive market.It is also conducive for courts to further resolve the "Law Enforcement Inability" problem,and is of far-reaching significance to the economic and social development in China.This paper talks about the construction of China’s individual bankruptcy discharge system.In addition to the introduction and conclusion,it is divided into five parts as follows.Part 1 demonstrates the necessity of the construction of individual bankruptcy discharge system in China.Besides allocating financial risks reasonably and protecting the honest but unfortunate debtors,the bankruptcy discharge system is able to realize equal repayment and effective protection of creditors’ interests.It can not only resolve the individual "Law Enforcement Inability" dilemma and solve the "Law Enforcement Difficulty" problem thoroughly,but also safeguard the public interests and promote social harmony.Part 2 reviews the legislative model of the individual bankruptcy discharge system.There are two main legislative models adopted in the legislation of bankruptcy discharge worldwide,which is called the apparent exemption and the permitted exemption.Based on the introduction and comparative analysis of these two legislative models,as well as thecurrent state of social development,it is proposed that China should adopt the legislative model of permitted exemption.Part 3 is about the conditions and exceptions for the bankruptcy discharge.Not all debtors in bankruptcy can be exempted from remaining debts,and not all types of debts can be discharged.The debtors who want to get the bankruptcy discharge benefits must be honest and cooperative firstly,and then they should perform well during the discharge inspection period with no misconduct.Furthermore,the debtors cannot be discharged when they’re within the limitation period of the second exemption.The exceptions for discharge should include at least tax payable,fines or penalties,debts arising from debtors’ malicious conduct of fraud,theft,tort,and other illegal acts,debts based on family support obligations,unspecified or undeclared claims due to reasons not attributable to creditors,and debts based on employment relationships.Part 4 explores the effectiveness of the individual bankruptcy discharge.For the debtors,after obtaining a bankruptcy discharge permission,they are relieved of their liability to settle the remaining debts within the legal scope.Meanwhile,it is equally effective between the debtors and the third parties who have the right to claim debts,such as joint debtors,guarantors and so on.In addition,attention should be paid to strengthening anti-discrimination protection for debtors.For the creditors,they are prohibited from continuing to claiming for debt settlement,whether they have declared their claims and participated in the bankruptcy proceedings or not.However,if the debtors pay off the exempted debts voluntarily,the creditors are entitled to receive and retain the interests,which means the debts to be discharged have the attribute of "Natural Debt".For the third parties,the bankruptcy debtors’ guarantors,joint debtors,and other third parties who provide guarantees cannot be exempted just because of the debtors’ bankruptcy discharge.Creditors’ rights to these subjects are not affected.Part 5 elaborates the revocation system of the individual bankruptcy discharge.If it is found afterwards that the debtors have been discharged by fraud,property concealment or other improper means,or they have had any other conduct that seriously violated the principle of good faith and damaged creditors’ interests,creditors are entitled to apply for revocation within two years from the date of the court’s discharge judgment.Besides,if the debtors have committed a fraudulent bankruptcy crime,the court may also revoke the bankruptcy discharge permission in accordance with its authority.After the discharge permission is revoked legally,the debtors have to repay the remaining debts,which means that creditors can request debtors to pay them off or apply to the court for enforcement.What’s more,the new claims created after the discharge and before the revocation have priority over the previously formed bankruptcy claims to be paid off.