Bankers warn against consulting with agents on debt payment

The Bankers Association of the Republic of China (BAROC) suggested yesterday that with the implementation of new regulations to allow for easier debt repayment deals, debtors who seek to negotiate with banks on their repayment conditions would be better off not using an agent.

The BAROC said some debt agents, including attorneys, have posted advertisements exaggerating the complexity of the Consumer Insolvency Proceedings, which are set to take effect April 11 with the aim of protecting debtors who are unable to pay off their debts all at once.

Such advertisements could mislead debtors into believing that only with an agent's help will they be able to obtain a better deal from the banks, which is far from the truth, the BAROC said.

"The Consumer Insolvency Proceedings actually simplifies the debt negotiation process, " noted Spike Wu, chairman of the association's Consumer Finance Unsecured Debt Restructuring Program Committee.

Wu said that under the proceedings, debtors need only fill out forms such as a certificate of income to accomplish a repayment deal with the banks. The regulation, Wu went on, makes the payment options flexible. "After negotiation, the bank will offer the debtor a tailor-made deal in which the amount of monthly payment and payment terms will vary according to each debtor's ability to pay," he said.

"The BAROC has also called on the government to take action against the misleading advertisements posted by agents," Wu said.

Wang Jing-rong, a judge at the Judicial Yuan, echoed Wu by saying that the best way to sort out debt is to negotiate with the biggest creditor to thrash out a repayment deal.

"Hiring a agent will only delay the process and make your wallet even thinner," Wang noted.

He added that the Ministry of Justice will determine if the misleading advertisements are in contravention of any law.

The Consumer Insolvency Proceedings, passed last June, offer two separate proceedings for debtors having trouble paying off their loans -- debt re-organization or debt liquidation.