The President promulgated Articles 29, 33, 42, 46, 54-1, 63, 64, 73, 75, 134, 140~142, 151, 153-1 and 156 of the Statute for Consumer Debt Clearance (hereinafter, the “Statute”) as amended with the addition of Article 64-1 and 64-2 via the Hua-Zhong-One-Yi-10700139191 Decree of December 26, 2017. The amendments are highlighted below:
First, claims over default penalties and interest are amended. In particular, Article 29 of the Statute is amended to treat a default penalty in excess of a specific percentage as inferior creditors’ claims to protect a debtor from the need to file cumbersome additional suit to reduce the claims. Article 33 of the Statute as amended provides that if the creditor is a financial institution or asset management company, the claims statement filed during the claims declaration period shall also indicate the order by which the amount of repayment will be used to satisfy expenses, interest and principals and the financial institution account number, clerk-in-charge and contact method with respect to the repayment in order to facilitate the progression of relevant procedures. In addition, Article 42 of the Statute as amended provides that when rehabilitation is applied, the application criteria are relaxed by excluding default penalties from the total debt limit.
In addition, there are amendments relating to rehabilitation arrangements. Article 64 of the Statute as amended specifically provides that when the settlement value of the rehabilitation debtor is calculated by the court, the property which cannot be easily cashed shall be excluded and the property which does not fall within the scope of the liquidation estate may be expanded pursuant to Article 99 of the Statute. In addition, Article 64-1 is added to stipulate that when a debtor’s repayment reaches a specific percentage, they shall be deemed to have used their best efforts to repayment the debt. If 90% of the income from a debtor’s disposable property after the necessary cost of living is deducted is used for debt repayment, the debtor is deemed to have used the “best efforts to repay the debt.” In case of a debtor without property, the standard shall be 80%. In addition, Article 64-2 is added to specifically stipulate the calculation standard the necessary cost of living for debtors and their dependents. The Compulsory Enforcement Law is followed where the calculation is based on the minimum cost of living announced by the local government multiplied by 1.2 times. In addition, flexibility for increasing or decreasing the cost of living is stipulated to meet the living needs of debtors.
Thirdly, Article 73 of the Statute is amended so that in case of rehabilitation claims to a debtor which are not attributable to a creditor’s failure to declare the claims, if it is difficult to achieve one-time performance of the rehabilitation terms for any reason not attributable to the debtor after the performance period of the rehabilitation arrangements expires, application may be filed with the court to extend the performance period for up to two years. In addition, Article 75 of the Statute is amended to reduce the minimum exempt settlement amount which may be adjudicated upon application by a debtor when the performance of the rehabilitation arrangements is difficult for reasons not attributable to the debtor and it is obviously very difficult to extend the term of performance.
Fourthly, the liquidation procedure is amended. To begin with, Article 140 of the Statute as amended specifically stipulates (1) the requirement that a creditor who has secured a ground for enforcement before the liquidation procedure begins shall be bound by the claims determined in the liquidation procedure when conducting compulsory enforcement against the debtor after a court ruling on non-exemption or revocation of exemption becomes final, and (2) the method for collecting the enforcement charge for other creditors who, by way of legal fiction, rely on a schedule of creditors as the ground for enforcement and declare their participation in distribution based on the existing claim amount. In addition, Article 141 of the Statute as amended provides that if a court rules that the debtor is not exempt pursuant to Article 133 of the Statute, the provisions of Articles 141 and 142 of the Statute concerning the application for exemption due to continued settlement and the minimum distributable amount for each ordinary claim in case of continued settlement by the debtor shall be attached.