China’s first regional individual bankruptcy regulation came into effect on March 1 in Shenzhen, South China’s Guangdong Province. The same day, Shenzhen government established an administration to take charge of individual bankruptcy issues.
According to the regulation, individual bankruptcy means when individuals are unable to repay debts, they can legally declare bankruptcy. If bankruptcy is ordered, the debtor’s remaining assets will be distributed fairly among creditors, releasing them from debt.
The regulation applies to individuals who have lived and paid social insurance in Shenzhen for at least three consecutive years, but those with bad credit records will be excluded. A debtor that has announced bankruptcy may keep some assets for basic needs, but will be barred from certain activities, including staying in star-rated hotels, visiting high-end clubs or buying luxuries.
Experts said the regulation will improve China’s market exit system which is helpful to encourage people to start businesses and bring vitality to the economy.
Old Version
