Amendments Proposed for Consumer Debt Clearance Act

Taiwan's Executive Yuan on 31 August 2017 proposed five amendments to the Consumer Debt Clearance Act. The amendments, if enacted, will provide a more flexible procedure under which debtors can rehabilitate themselves and increase the possibility for creditors to recover debts. Below are the major points of the amendments:

● Article 33 - creditors must notify debtors in writing of the order of payments, including expenses, interest, and capital.
● The liquidation value of a debtor's assets will determine the amount a debtor must pay under the "best effort policy" pursuant to newly proposed Article 64-1. If the assets are valuable enough to liquidate, the debtor must pay 90% of the estimated value of the assets to creditors. However, if the assets are not sufficiently valuable, the debtor is required to pay only 80% of the estimated value of the assets. The debtor's necessary living expenses are deducted from these amounts.
● Article 73 - once debtors encounter difficulty in paying unreported overdue debts, they may make repayments on an installment plan within two years.
● Article 75 - once a debtor pays two-thirds of his/her debts to the creditors, debtor may cease repayments on the debts. The Executive Yuan believes that this amendment will increase debtors' willingness to make repayments.
● Article 140 - Once a creditor applies for compulsory execution procedures, he/she must notify other creditors to join the procedure and reach an agreement on the allocation rate.
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