Chinese lawmaker proposes individual bankruptcy system for quake-affected people

NPC, CPPCC Annual Sessions 2009

Special Report:Global Financial Crisis

BEIJING, March 11 (Chinese media) -- China should establish a personal bankruptcy

system to enable people worst affected by last year's devastating earthquake to

enjoy normal life at an early date, a lawmaker said on Wednesday.

"The earthquake destroyed hundreds of thousands of houses. Though the

houses collapsed, the quake-affected people still need to pay off their mortgage

according to law," Shi Ying, a deputy to the National People's Congress, said in

a bill submitted to the parliament.

"Even if they don't have to pay now because of a lack of money, they have

to pay off in the future whenever they have the money," said Shi, also professor

of the law school under Liaoning University in northeast Liaoning Province.

"If there is a personal insolvency system, we can declare someone is

bankruptcy according to a fixed standard. And the bank can take all his or her

assets except minimal living necessities for the family, and the debt is thus

cleared," she said.

"Though the word 'bankruptcy' does not sound good, the system will help

those with individual insolvency avoid endless demand of debt payment, and thus

protect their basic interests and ensure their survival," she said.

A magnitude-8.0 earthquake hit Wenchuan County, Sichuan Province in

southwest China on May 12, 2008. The quake, the most destructive natural

disaster to hit China for decades, left more than 87,000 people dead or missing

and millions homeless.

Experts said China has entered an era of credit-driven spending, and an

increasing number of Chinese are purchasing apartments, cars and luxurious items

on bank loans.

In recent years, China eased the threshold for bank loans and cut deposit

interest rates to boost individual investment, Shi said.

"Individual consumption loans can spur increase of domestic consumption,

but it can easily led to insolvency for individuals especially amid the global

financial downturn," she said.

Shi proposed that China refer to the existing corporate bankruptcy law and

the civil procedure law, as well as experiences of other countries to set up the

individual bankruptcy system.