On Bankruptcy Discharge

Consumer bankruptcy principally is designed to permit debtor rehabilitation through the discharge of debts. From an individual debtor's standpoint, one of the primary goals of filing a bankruptcy case is to obtain relief from burdensome debt. Relative researches in our country are not systematic and many important problems, such as the significance of discharge in bankruptcy, have not been touched upon. By combining tools from economics and sociology, this paper will lay out a theoretical framework for bankruptcy discharge. By providing an comparison of several countries' legislation examples and documenting several facts concerning some countries, especially the United States, the United Kingdom, Japan and Germany, this paper will improve the theoretical foundation for discharge. This paper is aimed at providing a comprehensive theory of bankruptcy discharge that can justify its significance, and developing an appropriate contour for bankruptcy discharge provisions in China. The plan of the paper is as follows. It is composed of six sections. Section 1 first introduces two attitudes towards whether the honest debtor is to be relieved from the weight of oppressive indebtedness. Next, the subject, the nature and the function of bankruptcy discharge are discussed in the section. Discharge is available only to the individual debtor, and discharge is a right enjoyed by "honest but unfortunate" debtors. The function of discharge is analyzed from three different standpoints, including debtors, creditors, and social benefit.Section 2 of the paper reviews the historical development of bankruptcy discharge in such countries as the United Kingdom, the United States, Japan, Germany and China. It is evident that debtors' discharge has been an unavoidable trend in the world. Section 3 expounds the significances of the debtor's discharge. Firstly, the bankruptcy discharge is a legal affirmation of debtors' basic human right. Secondly, discharge can be regarded as a way by which the individual debtor assumes limited liability. Finally, discharge is justified by means of economic analysis.Section 4 provides two legislative models of bankruptcy discharge. Somecomments are given in this section on the choice of the two legislative models.Section 5 deals with denial of discharge. The bankruptcy discharge is not complete forgiveness. The intent to defraud creditors or escape debts is grounds for denial of discharge. This section also gives some opinion on relative regulations in Bankruptcy Law Draft (Jan.2001).Section 6 discusses the effect of discharge. The effect of discharge on debtors, creditors, the third party and discharge exceptions, revocation of discharge are involved in this section.