"Debt Reduction Scheme" - Recently, the police cracked down on the illegal fundraising case under the name of "Debt Reduction Scheme" involving Ningxia Fengming Legal Consulting Service Co., Ltd. and Guanglv (Shenzhen) Legal Service Co., Ltd.

Police Description - Guanglv Shenzhen Company has accumulated over 10,000 agents nationwide, collected tens of millions in agency fees, and charged over 10 billion yuan in "debt resolution" service fees from more than 10,000 debtors (among them, Ningxia Fengming Company's Xue and Li, as agents in Ningxia, helped Guanglv Shenzhen Company absorb over 100 million yuan from more than 1,000 people in Yinchuan and its surrounding areas).

What issues does such a scam reflect?

Bad Assets: "Opportunities" and "Pitfalls"

The police defined the case as follows: "The suspect deliberately misinterpreted the spirit of the documents related to the disposal of non-performing assets issued by the China Banking and Insurance Regulatory Commission..."

What does it mean? The phrase "折解债" in the suspect's mouth is somewhat like Wei Xiaobao deceiving others. To the client (a debtor eager to resolve their debt), much of what is said at the beginning is true, but when it comes to the most crucial sentence at the end, it becomes false.

What is true? The relevant document from the China Banking and Insurance Regulatory Commission on the disposal of individual non-performing assets is genuine.

What is fake? The suspect's claim that they can go to the bank to "resolve debt" is false.

As is well known, due to cyclical reasons and others, debt is spreading to various sectors of society. With the broadening scope of debt and the increasing base, business opportunities emerge. Those who see the potential in black and gray industries related to debt also begin to appear.

In the year, the China Banking and Insurance Regulatory Commission issued the document "Notice on Carrying Out Pilot Work on the Transfer of Non-Performing Loans." Subsequently, the pilot scope was expanded, and it became a routine operation for banks and other financial systems to hand over personal non-performing asset packages to the market for disposal.

The market-based disposal of individual non-performing asset packages has improved processing efficiency and given rise to significant market opportunities, thereby generating the following chain and logic:

When banks are unable to complete debt collection, they collectively package and sell it to. The asset package contains a large amount of debt that cannot be processed, so they cooperate with third parties. Due to the possibility of significant discounts from banks, such as a discount, when third parties handle the matter, the result may be a discount.

Therefore, ".折解债" exists as a result at the end of this chain. Conversely, the existence of ".折解债" is due to the series of processes and conditions above, where the cause determines the effect.

However, the black and gray market debt resolution exploits the market-oriented aspect of the above logic while obscuring the entire chain, fabricating loopholes in the chain for the clients. For instance, black and gray market institutions might tell their clients, "Since banks might discount the debt, why don't we negotiate with the bank to buy it directly from them, preventing it from entering the market? This way, the bank is satisfied, and we are satisfied. Isn't that the end of it?"

The client thought it made sense! Then, the black and gray market institutions promised the client "debt relief" and the client paid the fees in advance to the black and gray market institutions, with the agreement that the institutions would negotiate with the banks. Negotiating with banks, strength in numbers, right? With so many people in debt nationwide, this is a huge market! If you all organize and connect, join in, everyone can make money, right?

The client thought, "That makes sense!" ".Zhe Jie Zhai" (Debt Resolution) went from being a potential outcome of the disposal of a bad asset chain to being framed by criminal suspects as the "national policy on bad assets" and "trend," which was then further derived into a new "money-making opportunity."

As the saying goes, from the vegetable market to the neighborhood security guards, everyone is talking about such "opportunities to get rich." As a result, Guanglv Shenzhen's public slogan is: "Providing one-stop services for Chinese ordinary people to achieve a soft landing for their debts!"

The question is, can this "debt restructuring" really "negotiate" with the bank? How is that possible! A compliant financial debt handling chain, professionally designed by the financial sector, how could it possibly leave such a loophole!

Since the "negotiation" cannot be concluded, why continue to "negotiate"? Because this "negotiation" is not really a "negotiation" but an "anti-collection" tactic. The "opportunity" provided by the China Banking and Insurance Regulatory Commission for the disposal of non-performing assets has been exploited by black and gray industries into a "trap" targeting customers.

There is still a lack of personal bankruptcy system

What happens in "anti-collection" activities? For instance, black-gray market institutions may forge documents, such as fake medical certificates, proof of living difficulties, income certificates, etc., to deceive banks (according to relevant reports, recently, the police have cracked down on anti-collection gang chains, verifying over ten thousand fake seals involving various state organs and enterprises).

Black and grey market institutions also create incidents, maliciously file complaints, and even engage in extortion against banks. "Anti-collection" is a serious disruption to the normal financial order and has been a key focus of crackdowns in recent years.

In [month], the China Banking Association organized the development of the "Draft Identification Standards for the Grey Industry of 'Proxy Rights Protection' in the Chinese Banking Sector (for public comment)" and the "Draft Work Guidelines for the Grey Industry of 'Proxy Rights Protection' in the Chinese Banking Sector (for public comment)," aimed at identifying "anti-collection alliances," "bargain hunters," and "malicious complaints."

In reality, the key to how black and gray market institutions fleece their clients lies in the tactic of "delay." "Negotiation" is merely a means to "delay." The aim is to prolong the process, attract more people and more money, and defraud clients of their "service fees," rather than actually resolving their debts.

The debt issue is merely a pretext for amassing wealth, and "debt restructuring" is even more of a sham. That's why the police classified the case as illegal fundraising.

Of course, there is another scenario where intermediary agencies provide bridge financing to clients, using advance payments to clear the clients' outstanding debts, essentially borrowing new to pay off old... However, the intermediary agencies incur costs when they advance funds to repay debts. Clients who resolve their debts in this manner can only end up with even heavier debt burdens—the debt package grows larger and larger.

In fact, repaying debts is a responsibility, while evading debts is a breach of contract. When an individual faces difficulties in repaying debts and reaches the stage of debt resolution, a system is needed. For businesses, when debt issues arise and liabilities exceed assets, they can be addressed through bankruptcy and debt restructuring. However, for personal debts, debt restructuring is often not possible, one of the key reasons being that the personal bankruptcy system has not yet been established.

The personal bankruptcy system refers to the legal process where a natural person, as a debtor, is unable to repay their due debts. In such cases, the court declares the debtor bankrupt in accordance with the law, conducts liquidation and distribution of their assets, or adjusts their debts, grants debt relief, and determines the rights and obligations of the parties involved in the bankruptcy proceedings.

The personal bankruptcy system holds normative significance for the management of personal debts. On a certain date, Shenzhen passed the "Shenzhen Special Economic Zone Personal Bankruptcy Regulations," marking the beginning of China's exploration of the personal bankruptcy system.

On a specific date, the Shenzhen Bankruptcy Affairs Administration released the "Announcement on Special Supervision Work for Personal Bankruptcy Debtor Information Reporting in the Year," which disclosed the supervision information of a total of personal bankruptcy debtors from the year to the present, reflecting the personal bankruptcy supervision mechanism of "strict supervision for liquidation debtors and moderate supervision for reorganization debtors."

The number of people implementing personal bankruptcy, in comparison to the current reality of debt, is clearly not on the same scale or level. The difficulty of establishing a personal bankruptcy system lies in the fact that its implementation requires the joint support of the legislative and judicial systems, technological means, credit systems, social security systems, and more. Therefore, this path still needs to break through the ice.