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recently, the development and reform bureau of longhua district, shenzhen, issued a "risk warning on being aware of the "debt settlement" scheme", stating that guanglu (shenzhen) legal services co., ltd. (hereinafter referred to as "guanglu shenzhen company") and its partner agencies pre-collect service fees from credit card and loan overdue customers, and promise to resolve debts at a 25% discount within a certain period of time. in fact, their purpose is to defraud customers of funds and franchise fees. they are currently under investigation by the jinfeng district public security bureau of yinchuan city, ningxia for suspected crimes.

to this end, the longhua district development and reform bureau reminds people to be wary of the risks of "debt settlement" and stay away from all kinds of illegal "debt resolution", "debt reduction" and "debt settlement" routines.

in fact, similar risk warnings often appear on the official websites of local governments or relevant departments.

in this regard, industry insiders told china business news that the so-called "debt relief" business not only fails to "resolve" the debt, but is likely to make the debtor "deeply trapped". if the debtor is indeed unable to repay the bank debt due to financial difficulties, he can negotiate directly with the bank. the bank has already introduced corresponding preferential policies such as installments, exemptions, etc.

25% off "debt relief" involves illegal fundraising

on september 10, before the above risk warning was issued, the ningxia police announced that they had cracked an illegal fund-raising case. the police found that ningxia fengming company and guanglu shenzhen company charged a service fee of 25% of the total amount of "debt relief" under the guise of "debt relief" for each order, and promised that the debtor would resolve the debt within 6 to 18 months. guanglu shenzhen company formulated an agent commission system, built a special business platform to record and issue business commissions, and developed more than 20,000 agents across the country, collecting more than 20 million yuan in agency fees, and charged more than 200 million yuan in "debt relief" service fees to more than 5,000 debtors.

according to the confession of the criminal suspects, the "debt relief" method vigorously promoted by guanglu shenzhen company and ningxia fengming company took advantage of the fact that many debtors were eager to repay their debts but had a vague understanding of relevant policies and regulations. by making malicious complaints to banks or providing false certification materials, they further gained the trust of debtors and defrauded customers' funds.

in the scam, the victims were all people with bad credit or overdue debts, with the largest debt being nearly one million yuan and the smallest debt being nearly 200,000 yuan. the vast majority of people took the chance and continued to raise funds by borrowing, swiping credit cards, etc., and paid the "debt relief" service fee to guanglu shenzhen company, which left them with new debts before they had paid off their old debts. the scam not only delayed the debtors' normal repayment period, but also infringed on their property once again.

the so-called debt settlement is to resolve the debts between the creditor and the debtor and to dissolve their creditor-debtor relationship. similar private "debt settlement" black industries have been repeatedly warned of risks.

for example, the people's government of guangde city, anhui province, published an article on its official website in march last year stating that the process of debt relief is the process of disposal of non-performing assets, and the disposal of non-performing assets is a financial activity, so it needs to be licensed. "debt relief companies" are not licensed local asset management companies, but companies that provide "debt relief services" under the banner of "debt disposal", "non-performing asset disposal", "asset liquidation" and "risk management". such companies have never obtained approval from financial management departments, are not financial institutions or local financial organizations, but are general market entities.

the ningxia hui autonomous region local financial supervision and administration bureau also published an article stating that the illegal debt relief agencies on the market are not approved by the financial regulatory authorities. individuals have been unable to repay their debts due to excessive borrowing. the "debt relief agencies" provide "clients" with debt offset, custody, integration, resolution, and physical exchange services. they promise to convert the debts in the hands of "clients" into continuous cash flow and return profits on a regular basis, inducing "clients" to pay consulting fees, deposits, and even "invest in shares", seriously disrupting the order of the financial market and posing a large risk of illegal fundraising.

not only did it not "solve" the problem, but it also "robbed" the service fee

he weifeng, deputy administrative director of guangdong zhonghan law firm, told caixin that the "debt resolution" black industry is what banks hate the most. on the one hand, the debtors themselves are already stretched to the limit, but the "debt resolution" black industry still wants to plunder them; on the other hand, the large number of malicious complaints made by the "debt resolution" black industry not only damages the reputation of the banks, but also disrupts the financial order.

"therefore, the 'debt relief' black industry has also been one of the main targets of crackdown by financial regulatory authorities in recent years," said he weifeng.

it is understood that the "debt relief" routines generally include debt repayment, third-party guaranteed financial fulfillment, and barter debt relief models. if the creditor is a bank, the "debt relief" company will also use malicious complaints and other methods to "threaten" the bank.

according to he weifeng, the "debt relief" black industry will first charge the debtor a service fee ranging from 3,000 yuan to 4,000 yuan. if the debt is successfully relieved, the relevant fees will be charged again based on 30% to 40% of the relief amount. even if the debt is not successfully relieved, the aforementioned service fee will not be refunded.

he weifeng explained that when facing banks, the "debt relief" black industry will maliciously complain to the financial regulatory authorities in the name of the debtor. the reasons include soft and violent collection, or providing false certification materials to put pressure on the bank. in the execution stage, the "debt relief" black industry will also maliciously complain to the court. the above behaviors will cause tension between creditors and debtors. even if the reduction is successful in the end, it will damage the debtor's reputation and make it difficult for the debtor to borrow money from financial institutions in the future.

in addition, it is common for the "debt resolution" black industry to run away. "i have a client who had previously found a "debt resolution" black industry and paid a service fee. as a result, after the other party made several rounds of malicious complaint calls, the company disappeared. not only did the client's debt problem not get resolved, he was also put on the bank's "blacklist." said he weifeng.

according to he weifeng, in fact, banks have introduced many preferential policies for debt reduction. as long as the debtor calls the customer service hotline, the bank will respond within a short time, including negotiation, suspension of principal and interest, installment extension, etc. for financially disadvantaged customers who need to repay the loan in one lump sum, the bank will also give a certain degree of reduction in interest or even principal based on the customer's specific situation, such as suffering from a major illness.

at the same time, he weifeng emphasized that since banks hate the "debt resolution" black industry very much, in the process of banks and debtors negotiating debt relief, once the "debt resolution" black industry intervenes, the banks will no longer "relax", because once they compromise with the "debt resolution" black industry, a large number of "debt resolution" black industries will flock in, and the banks will be very passive.

diversified debt management after default

judging from the financial reports of listed banks last year and the first half of this year, the non-performing rate of personal loans has been on the rise, which has also given the "debt relief" black industry an opportunity to take advantage of the situation.

in the housing mortgage sector, 21 out of 42 listed banks disclosed their semi-annual personal housing loan non-performing rates, of which 19 saw varying degrees of increase compared with the beginning of the year.

in the field of credit cards, the npl ratios of china minsheng bank and industrial and commercial bank of china exceeded 3% in the first half of the year, reaching 3.24% and 3.03% respectively, up 26 and 58 basis points respectively from the beginning of the year. the npl ratios of ping an bank, shanghai pudong development bank, bank of chongqing, bank of communications, bank of zhengzhou and bank of shanghai all exceeded 2%, all rising to varying degrees from the beginning of the year.

in the field of business loans and consumer loans, 19 banks announced their semi-annual business loan non-performing rates, of which 15 increased compared with the beginning of the year; 16 banks announced their semi-annual consumer loan non-performing rates, of which 10 increased compared with the beginning of the year.

"in fact, the courts are now under great pressure to enforce the law. we have found that many local courts tend not to accept cases involving overdue credit loans of less than 50,000 yuan, but instead try to mediate between banks and debtors to resolve the issue through negotiation, either by extending the loan period or reducing or exempting it, trading time for space, and banks basically agree to this," said he weifeng.

"especially for customers who have defaulted on their mortgages, banks will handle the situation flexibly based on the customer's situation and willingness to repay. for example, if the customer is temporarily unemployed and has a strong willingness to repay and actively cooperates with the bank to deal with the debt, the bank will generally not immediately deal with the customer's property. instead, the bank will give a certain amount of time and suspend the collection of interest. if the customer is able to work, the bank may even re-sign a mortgage contract with the customer, and it is possible to lower the interest rate or extend the term," he said.