The China Post news staff
The executive are responding to the fact that the Legislative Yuan Friday ratified the revisions to the regulations to free children from being burdened with debts incurred by their parents or even grandparents.
The new rules exonerated underaged people and those who are incapable of managing assets or financial affairs from the debts inherited from their parents or grandparents.
If these people inherit some assets of value, they must use the assets to clear the debts owed. But they will no longer be held responsible for the amount of debt that exceeds the value of assets they inherit.
After the revisions are put into effect, banks are afraid of debtors transferring the ownership of their assets to others to help their children or grandchildren from using the assets to clear the debts owed.
Meanwhile, local banks may move to require borrowers to offer documents to prove their financial ability and show their health conditions, lest the loans become "bad loans" soon after they are lent out in case the poor-health borrowers die not long after the lending.
Bank executives also noted that as long-term housing loans will involve higher risks after the revised inheritance rules become effective, domestic banks may become much more conservative in appraising the collaterals offered by loan applicants, and the amount of each housing loan is likely to drop significantly.
As for consumer loans, borrowers may be required to buy credit insurance policies, with lending banks as beneficiaries of such insurance.
On another front, it will be increasingly difficult for the underprivileged people to seek loans from banks, forcing them to turn to underground money lenders.
Accordingly, underground money lenders are likely to adopt tighter lending conditions and may take more cruel methods to retrieve money in case borrowers fail to repay loans on time.
Also yesterday, presidential candidate Ma Ying-jeou of the opposition Kuomintang said that the latest revisions to the inheritance regulations under the Civic Code has marked a significant milestone in the history of the Civic Code, especially in that the new rules will be retroactive permanent without time limitations, instead of being retroactive for only three years as proposed originally.
It was KMT lawmaker Hsu Chung-hsiung what made a motion to allow the new rules retroactive permanent without time limitations.
According to Hsu, data gathered by social welfare organizations show that more than 70 percent of children burdened with parents' debts have been stuck in the debt pit for longer than three years.
Hsu and his KMT colleagues managed to persuade DPP lawmakers to eventually pass what could be one of the best bills ratified by the Legislative Yuan in many years.
Many children in Taiwan are born with serious debts from their parents because laws stipulate that while children inherit their parents' assets, they also automatically take over the outstanding debts.
The existing regulations in the Civic Code allow heirs to abandon the inheritance rights as a way to give up both the assets and debts if they are aware that the debt amounts are far higher than the value of assets they are entitled to.
But many do not know there is only a three-month valid period to file documents with the court.
Many did not take action to forsake the inheritance because they had no way to know what debts were actually incurred by their parents or to whom the debts were owed.