More than 70 percent of people would still be living with inherited debt even if a proposed amendment to the Civil Code is passed, members of Taiwan Fund for Children and Families (TFCF) said during a press conference in Taipei yesterday.
According to an amendment to the Civil Code that passed its first reading at the legislature last week, people under the age of 20 will be automatically entitled to "limited debt inheritance" -- meaning that they would only have to repay any debts they have inherited by using the assets they have inherited, not from their own pocket.
The proposed amendment to the code also applies for three years retroactively.
The Civil Code allows "limited debt inheritance," but only if the person inheriting the debt makes a request within three months of the benefactor's death.
"However, most people are ignorant of the law and they only find out they are in debt when they are pursued by creditors," TFCF social works division director Chou Hui-hsiang (周慧香) told the news conference.
A survey of more than 1,700 households by the organization showed that 24.6 percent of children under 18 are more than NT$500,000 in debt and almost 80 percent of those indebted children are currently attending junior high school or younger.
Although the proposed amendment may help, Chou said it is not enough.
"The retroactive period of the proposed amendment is only three years -- but our survey found that more than 70 percent of debt inheritance occurred more than three years ago," Chou said.
A Tsinghua University student surnamed Tsai (蔡) is a victim of inherited debt.
He said he only learned four years ago when his sister applied for a mortgage that he, his brother and sister had inherited a NT$2.6 million (US$80,400) debt left by their father who died in 1976.
"My father was a guarantor to a NT$5.6 million loan taken out by an uncle," Tsai said. "Although part of the loan had been repaid, there was still NT$2.6 million left."
Knowing the law, the uncle's family quickly applied for limited debt inheritance after the uncle's death, leaving Tsai's family to shoulder responsibility for the debt, he said.
"NT$2.6 million was the amount 21 years ago, with a 15 percent annual interest rate the total amount is now NT$50 million," Tsai said. "I know I will never be able to pay off the debt that has nothing to do with me -- and I don't know what the point of life is for me now."
Kaohsiung District Court Judge Chen Ye-hsin (陳業鑫) said unlimited debt inheritance was "unconstitutional."
"Banks loaned out the money based on an assessment of the borrower's financial condition, so how can the borrower's children be expected to pay off the debt with their future income just because they don't know how to make a limited inheritance declaration?" Chen said.
Chen said adult family members should also be entitled to automatic limited debt inheritance.
The head of Democratic Progressive Party (DPP) Legislator Tien Chiu-chin's (田秋堇) office, Cheng Chih-chieh (張智傑), who was among the audience, said he would seek to renegotiate the amendment next week.