萬國法律事務所

Since its enactment, Taiwan’s Consumer Debt Clearance Act has been criticized as ineffective. According to statistics, only 201 of 2,224 applications for debt clearance filed at the district courts through August of this year were granted.

As a result, Taiwan’s Judicial Yuan began working on amendments to the Act earlier this year and the draft amendments have been sent to the Legislation Yuan for discussion and consideration.

The amendments add a mediation procedure, relax the requirements for approval of rehabilitation plans, and reduce debtors’ liabilities.

The draft amendments allow debtors to apply for mediation at the court having jurisdiction over the debtor’s domicile and the mediation commission of the town, district or city, and permit debtors to request negotiation with the banks. It is hoped that these changes will enhance the effectiveness of negotiations.

The proposed amendments require the courts, when reviewing rehabilitation plans, to consider whether debtors must endeavor to repay the debt rather than considering whether the plan is fair, as required in the current Act. This change is proposed in order to increase debtors’ chances of obtaining court approval for their rehabilitation plans.

With regard to liquidation, the current Act makes debtors liable for their debts resultant from their own faulty actions. This stipulation has resulted in many debtors remaining liable for substantial portions of their debts. Therefore, the proposed amendments revise this stipulation and make debtors liable for their debts resulting from their purchases of luxury goods or services within two years before their application for liquidation.