Study On Right Of Set-off In Bankruptcy

Right of set-off in bankruptcy means after the debtor go bankrupt,the bankruptcy creditor who has the debt to the debtor may not follow the procedure of bankruptcy and set off its debts shouldered. Right of set-off in bankruptcy has important status in bankruptcy field, the nature of right of set-off in bankruptcy is legal set-off. Different views exist in educational field about right of set-off in bankruptcy. I think right of set-off in bankruptcy is a part of civil set-off. Because if so right of set-off in bankruptcy can base on civil law set-off. Also can avoid confusion in the judicial practice. Even so, there is some difference between right of set-off in bankruptcy and civil set-off at the factors and purpose. Right of set-off in bankruptcy has efficiency and guarantee in function the same as civil set-off. But it lays particular emphasis on the function of guarantee.In the area of essential factors, right of set-off in bankruptcy not only accords with the demand of legal set-off in civil law, but also expand or limit the essential factors of legal set-off for the purpose of fairy and efficiency. It is generally acknowledged that written way should be used when the creditor performs right of set-off in bankruptcy the same as legal set-off. But there are different views about if the right of set-off in bankruptcy must be declared and investigated. The first one says the creditors should undergo this procedure for the goal of fairy, justice and transparency. The second one says the procedure that the creditor undergone is not a procedure that the creditor must go through, so bankrupt law should not require the creditor's right must be declared. The third one says if there are not disputes about the relevant item at creditor's rights between the creditors and the debtor. I think the third one is comparatively rational. Because performing right of set-off in bankruptcy has its own specific procedure. The time of its effect should be when the written notice reaches the debtor.In addition there are different views in the educational area about the effect of performing right of set-off in bankruptcy. The first one is called Automatic Set - off which means as far as the debt is coextensive, they will not exist automatically. The second one means that not only set-off discharges the obligations but also it has a retrospective effect. The third one means set-off discharges the obligations as far as the debt are coextensive, as from the time of notice. Whether the legislation adopts the retrospective set-off will influence the interests of parties. Among three views I think set-off should has a retrospective effect. Because if so the law will accord with the true state of legal life, and help to safeguard the party's legitimate rights and interests. The civil law code draft should keep on the just view.