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Bankruptcy law could help quake-hit

CHINA should establish a personal bankruptcy system to enable people badly affected by last year's devastating earthquake to enjoy normal life at an early date, a lawmaker said yesterday.

"The earthquake destroyed hundreds of thousands of houses. Though the houses collapsed, the quake-affected people still need to pay off their mortgages according to the law," Shi Ying, a deputy to the National People's Congress, said in a bill submitted to the parliament.

"Even if they don't have to pay now because of a lack of money, they have to pay off in the future whenever they have the money," said Shi, also a professor of the law school under Liaoning University in northeast China's Liaoning Province.

"If there is a personal insolvency system, we can declare someone is bankrupt according to a fixed standard, and the bank can take all his or her assets, except minimal living necessities for the family, and the debt is then cleared," she said.

"Though the word 'bankruptcy' does not sound good, the system will help those with individual insolvency avoid the endless demand of debt payment, and thus protect their basic interests and ensure their survival," she said.

A magnitude-8.0 earthquake hit Wenchuan County, Sichuan Province in southwest China, on May 12, 2008. The quake, the most destructive natural disaster to hit China for decades, left more than 87,000 people dead or missing and millions homeless.

Experts said China has entered an era of credit-driven spending, and an increasing number of Chinese are purchasing apartments, cars and luxurious items on bank loans.

In recent years, China eased the threshold for bank loans and cut deposit interest rates to boost individual investment, Shi said.

"Loans can spur domestic consumption, but they can easily lead to insolvency," she said.

Shi proposed China refer to the existing corporate bankruptcy laws and the civil procedure laws to set up an individual bankruptcy system.


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