Shenzhen has drafted China’s first personal bankruptcy laws as the southern city tackles broader economic troubles stemming from the coronavirus outbreak, paving the way for others to follow suit, reported Reuters.
The rules are intended to give “honest and unfortunate” debtors the chance to escape the mire of debt and make a comeback, the city government said in an official post on Wednesday. Despite corporate bankruptcy laws nationwide since 2007, individuals are still held personally liable for business debts, making their recovery particularly difficult, according to draft rules posted on a Shenzhen government website on Tuesday.
The draft rules, open for public comment until June 18, allow Shenzhen residents who cannot pay their debts to apply for personal bankruptcy if they have paid social insurance in the city for at least three years.
Once approved, applicants will spend at least three years in a supervised “probation” period before all or part of their debts are wiped clean. During this time their expenditure will be supervised, the draft rules said.