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"this court believes that the debtors guo and li meet the conditions for bankruptcy... in accordance with article 84 of the shenzhen special economic zone personal bankruptcy regulations, the following ruling is made: declare the debtors guo and li bankrupt." on august 29, the judge of the shenzhen intermediate people's court served the ruling to the debtors guo and li. this is the first time that the shenzhen intermediate people's court has issued a ruling.the first ruling declared a couple of debtors bankrupt.

declaring a debtor bankrupt is a legal procedure for personal bankruptcy liquidation and the beginning of the debtor's exemption probation period. after the expiration of the probation period, the debtors guo and li can apply to the court for exemption of their unpaid debts. whether to exempt their unpaid debts shall be reviewed and determined by the people's court in accordance with the law.

image source: visual china

meet the conditions for bankruptcy

guo and li are husband and wife. since 1998, guo and li have opened a towel wholesale and retail store in luohu district, shenzhen.a fire broke out in the towel store warehouse.about 1.5 million yuan worth of inventory was burned, and the couple filed arbitration and lawsuits with the store lessor and property company for compensation for the loss of goods, but they lost both cases and the store was no longer in operation. in 2012, the couple reopened the store with a monthly rent of more than 10,000 yuan, but business was poor and it has been in a loss-making state.

from 2012 to 2023, the couple borrowed money from relatives, friends, various platforms and banks to repay debts and maintain the store operation... unable to pay the store rent, the store had to be closed and cancelled in october 2023. the couple's total debt was more than 9.28 million yuan.

after guo and li applied to the court for personal bankruptcy liquidation, the shenzhen intermediate people's court ruled to accept the application on may 31, 2024, and designated a law firm to serve as the bankruptcy administrator for the two.

the bankruptcy administrator found that: guo currently has no job and no income, and is in the recovery stage after coronary stent surgery; li has retired and can receive a monthly pension of more than 4,000 yuan, and the two have no other income. the couple owns a property located in luohu district, shenzhen, with a construction area of ​​114.39 square meters, and the two have no other large assets. guo and li have less than 400 yuan in cash and deposits. the close relatives living with guo and li have two sons and guo's mother. the eldest son has a fourth-level intellectual disability; the youngest son is still in college; li is at home taking care of the eldest son and guo's mother. the bankruptcy administrator believes that guo and lithe bankruptcy facts stated and the information reported are true, and there is no transfer of property, evasion of debts, false statements, etc.meet the personal bankruptcy liquidation conditions stipulated in the shenzhen special economic zone personal bankruptcy regulations.

the shenzhen intermediate court believes that the debtors guo and li meet the conditions for bankruptcy and should rule to declare guo and li bankrupt. the debtor's property disposal plan shows that after the court declares guo and li bankrupt, the administrator will promptly take over a property in luohu district, shenzhen, owned by the two.the property will be sold through online auction, and the proceeds will be used to repay debts according to the distribution plan.

since the court declared,

from the date of the debtor's bankruptcythree years,to relieve the debtor of his unpaid debtsinspection period.

during the probation period, debtors guo and li shall continue to perform the obligations stipulated in the restrictive behavior decision made by the people's court and other obligations of the debtors stipulated in the "regulations on personal bankruptcy of shenzhen special economic zone".

during the probation period, the monthly income of guo and li can be used to support themselves and their dependents.keep a certain amount of living expenses and medical expenses.two people's incomeamounts exceeding this fee amount or newly discovered bankruptcy property will be taken over and distributed by the administrator.

after the probation period expires,debtors guo and li can file a complaint with the courtapply for forgiveness of outstanding debts,whether to exempt its unpaid debts shall be reviewed and decided by the people's court in accordance with the law.

personal bankruptcy is not a way to escape debt

it is natural to pay back debts, but in reality, there are some honest but unfortunate people who find it difficult to pay off their debts and are stuck in debt for a long time.

the first personal bankruptcy regulation in my country, the shenzhen special economic zone personal bankruptcy regulations, which was reviewed and approved by the shenzhen municipal people's congress standing committee, will come into effect on march 1, 2021. the regulations stipulate that personal bankruptcy procedures include three types: personal bankruptcy liquidation, reorganization, and reconciliation procedures.

shenzhen citizen liang moumou chose to start a business in the bluetooth headset market in 2018, but he has been unable to obtain stable customer resources. coupled with the impact of the covid-19 pandemic, his bank debts have increased and he is unable to repay all debts. in march 2021, liang moumou applied for personal bankruptcy to the shenzhen intermediate people's court, and in may 2021, the shenzhen intermediate people's court accepted the application.

the court found out that liang moumou declared a personal debt of about 750,000 yuan, and interest accrued on the day the court accepted the personal bankruptcy application. after liang moumou's business failed, he worked as a structural engineer in a company with a monthly income of about 20,000 yuan, and had a strong willingness to repay his debts. the court agreed that liang moumou should apply the reorganization procedure and negotiate with creditors to formulate an installment repayment plan. according to the reorganization plan that the court ruled to take effect, in the next three years, except for 7,000 yuan per month for basic living and some production and living necessities as exempted property, all other income of liang moumou and his wife will be used to repay debts. if liang moumou fails to implement the reorganization plan, the creditors have the right to apply to the court for bankruptcy liquidation. in july 2021, the shenzhen intermediate people's court approved liang moumou's personal bankruptcy reorganization plan.

liang worked diligently and actively repaid his debts. in april 2023,that is, in the 21st month of the implementation of the restructuring plan, he finally repaid all the principal of the debt, which was 15 months ahead of schedule compared with the requirements of the restructuring plan.in june 2023, the shenzhen bankruptcy court served a civil ruling to liang moumou, ruling that the case had been executed and exempting him from his unpaid debts within the scope stated in the reorganization plan in accordance with the law.

at that time, the lead lawyer for the administrator of the country's first personal bankruptcy case said that if the calculation was not stopped, it was estimated that more than 300,000 yuan in interest would be generated.

since the implementation of the shenzhen special economic zone personal bankruptcy regulations, as of june 2023, the shenzhen intermediate court has received a total of 1,635 personal bankruptcy applications, 411 of which have been filed for review and 117 have been accepted. as of the end of august this year, the shenzhen intermediate court has accepted more than 350 personal bankruptcy cases.

similar situations are not only happening in shenzhen. on december 2, 2021, the nanjing intermediate people's court issued the "implementation opinions on carrying out the pilot work of economic rebirth of honest executors". it is reported that this pilot work has very high requirements and examinations for honesty. if the debtor wants to evade debts by transferring or hiding property, he cannot withstand the procedural review, and the review will make this person a transparent person. some people are unwilling to be transparent, and they cannot withstand transparent scrutiny.

will someone use the personal bankruptcy system to escape debt? according to yangcheng evening news, cao qixuan, president of the shenzhen bankruptcy court of the shenzhen intermediate people's court, said that in response to social concerns, the shenzhen special economic zone personal bankruptcy regulationsat the beginning of its formulation, it was strictly designed to prevent debt evasion.for example, it is stipulated that applicants should strictly fulfill their obligations of good faith, establish a personal bankruptcy information registration and disclosure system, etc. at the same time, the courts should establish rules and regulations and exercise prudent control in the trial work.existing cases have proven that attempts to evade debt are “blocked” by layers of checkpoints.

wang said that her annual income is about 200,000 yuan and she keeps pets. "my boyfriend and i are both fans of electronic products. when we were shopping for home appliances, we chose more expensive products, spending more than 330,000 yuan on them." wang's debt principal and interest is about 989,000 yuan. when she applies for personal bankruptcy reorganization, she plans to repay 100% of the principal, totaling more than 880,000 yuan.

"she continued to spend lavishly even after she became indebted. she applied for reorganization and proposed to repay the entire loan principal, but we did not agree. how will society view an individual's excessive consumption and request for interest reduction?" in cao qixuan's view,the handling of personal bankruptcy cases should fully consider the issue of "balance of interests" and pursue political, social,the organic unity of legal effects is "indispensable".