Practice approaches and future trends in the personal bankruptcy system in China

Abstract

AbstractIn recent years, the need to enact a personal bankruptcy system has become progressively urgent in China. With increased social acceptance, the practice of personal debt solutions in local courts has been booming. The promulgation of the Personal Bankruptcy Ordinance of the Shenzhen Special Economic Zone in 2021 is an important event of epoch‐making significance in China's bankruptcy legislative history. The revision of the Enterprise Bankruptcy Law 2006 has been included in the legislator's working plan. Whether a personal bankruptcy system could be introduced during the revision has become a major focus. The challenges to personal bankruptcy legislation in China include the public concern that debtors abuse the system to evade debts; the judicial pressure caused by too many cases; and the lack of an out‐of‐court mediation mechanism. The personal bankruptcy system is one of the most inconsistent legal fields in the world. China's future personal bankruptcy law will confine its discussion to the subjects of law, bankruptcy discharge period, and regulation of debtors' debt evasion. Legislators should refer to the advanced legislative experience and set up the personal bankruptcy system by combining it with China's national situation.