Print

Mail

wiki links

Debtors file for help under new rules for loan negotiations

Members of the Legal Aid Foundation deliver a petition for debt rehabilitation for credit card debtors to the Taipei District Court yesterday. PHOTO: LIU HSIN-DE, TAIPEI TIMES

As the Consumer Debt Clearance Regulations (消費者債務清理條例) came into effect yesterday, 174 people with loan defaults filed applications to courts nationwide to enter pre-bankruptcy negotiations with bank creditors, data from the Judicial Yuan showed.

Thousands could soon follow suit, as the Taipei-based Legal Aid Foundation’s (法律扶助基金會) figures, as of yesterday, showed that a total of 14,000 people had rquested their legal counsel and only the first 600 had been provided with legal aides because of a lack of staffers at the government-sponsored lawyers’ group.

Taishin International Bank (台新銀行) vice president Spike Wu (吳清文), who is also the chairman of the Bankers’ Association of the Republic of China (銀行公會) consumer finance unsecured debt restructuring program committee, had previously estimated that at least 50,000 loan borrowers could file applications.

A judge yesterday advised consumers with loan defaults to be prepared to pour all their monthly earnings — after basic living costs are deducted — into repaying their debts.

“To restructure debts successfully, borrowers should be aware of their repaying obligations, while bank creditors should tolerate their limited financial capabilities,” Judge Wang Chin-lung (王金龍), of the Judicial Yuan civil department, said in a telephone interview yesterday.

“We hope a win-win situation can be found [between loan borrowers and bank creditors] through the implementation of the regulations, which I personally believe are based on the principal of ultimate sincerity [on the parts of both parties],” Wang said.

Wang yesterday advised borrowers to seek legal advice from lawyers at the foundation or at the court’s consultation department, both of which are free of charge.

Wang said borrowers should only visit private lawyers if they could afford it.

The Bankers’ Association yesterday also discouraged cash-strapped filers from pumping money into legal counsel.

“The filing process is as simple as can be,” Wu said.

“All filers need to do is fill in our application forms and honestly report their debts and earnings so we can come up with a debt-repayment plan together,” Wu said.

But the Legal Aide Foundation said that it found part of the application unreasonable.

The process could victimize an already financially disadvantaged group by pressuring debtors into signing a deal with unfavorable terms.

Wang said there was some truth to Wu’s concerns.

Articles 4 and 19 on the form, for example, stipulate that the association reserves the right to nullify the pre-bankruptcy negotiations if a filer fails to provide all the necessary documents for the process.

“Some of those articles have no legal footing and should be revised,” said Lin Feng-jeng (林峰正), convener of the foundation-affiliated Debt-Restructuring Alliance (個人債務更生聯盟).

He urged bank creditors and court judges to formulate a reasonable repayment plan for defaulting debtors who had suffered “unavoidable circumstances affecting their livelihoods.”

In response, Wu said that the association was willing to revise parts of the application form as long as borrowers showed their sincerity about repaying their debts.

The association also proposed a preliminary interest rate plan, with a more than 5 percent interest rate for loans of less than five years, a 3 percent to 5 percent rate for five to eight-year loans, a rate below 3 percent for eight to 10-year loans and no interest for loans of more than 10 years.

However, the final interest rates will be negotiated and decided by bank creditors, Wu said.
This story has been viewed 815 times.