The Consumer Debt Clearance Act ("the Act") was promulgated on July 11, 2007, and implemented on April 11, 2008. In response to the implementation of the Consumer Debt Clearance Act, LAF not only amended the scope of legal aid and eliminated the rule of not granting aid in bankruptcy cases, but also considered the possibility that CDCP cases would flood into the branch offices of LAF after the implementation of the Act. In order to prevent the situation from paralyzing the branch offices, LAF planned for the branch offices to expand attorney consultation in service stations so that consultation attorneys at the stations can directly accept applications. In addition, the Legal Aid for Consumer Debt Clearance Program (CDCP) was approved by the Board of Directors in January, 2008, aiming at accepting application for legal aid in CDCP cases and providing legal consultation.
From the time of the establishment of the program until the end of December 2014, the Foundation has received a total of 64,065 applications. Among these applications, 21,266 applicants were qualified for the program and received aid. The percentage of approval has since increased from just 62.84% in 2008 to 81.85%. The number of applications of CDCP cases in 2014 (excluding legal consultation) was 2,947. The number of cases approved by the Examining Committee was 2,262, and 570 cases were refused. After the refusal, 107 applicants requested review. The percentage of cases approved after review reached 58.95%.
Since the beginning of the launch of CDCP in 2008, more than 23,000 applications flooded into the branch offices, and the approved cases also exceeded 10,000. However, the court was rather conservative, and the court approval rate of restructure or write-off under the Act was very low, and the debtors were losing faith, causing the applications for CDCP to drop after 2008, and now only approximately 5,000 applications are filed.
After the Act was substantially modified on January 4, 2012, results of debt clearance trials have improved significantly in recent years. The write-off percentage increased from less than 10% to 50%. The approval rate of the restructuring program also increased from 20% to 70%, which was a positive boost to discouraged debtors. In addition, LAF's Board of Directors passed an amended draft of the Financial Eligibility Criteria on Granting Legal Aid in December 2013. The amendment not only reinstated "partial aid", but also added to the "monthly disposable income" deductible items, "average monthly repayment under a restructuring program or debt clearance program" and "monthly repayment intended by applicants of debt clearance", which may also increase the number of approved cases.
In order to notify more debtors of the good news, LAF held eight seminars for the debtors throughout Taiwan in 2014 so that more of them can regain financial soundness through the Act. A total of 617 persons attended the 8 seminars.
Furthermore, many legal aid attorneys participated in the program when it was launched. However, complicated and cumbersome processes in practice and unreasonable remuneration led to a slow loss of attorneys. LAF noticed the lack of CDCP attorneys in all the branch offices and the Board of Directors approved the loosening of qualifications of CDCP attorneys in March 2014 so that attorneys having less than two years of practice could also handle CDCP cases. In addition, 10 CDCP attorney training sessions were held throughout Taiwan in 2014 to recruit more attorneys to handle the CDCP cases. A total of 286 attorneys participated in the training, and afterwards 59 new attorneys joined LAF as CDCP legal aid attorneys.
In order to encourage attorneys to take on CDCP cases and to correct the unreasonably low CDCP remuneration in the past, LAF amended the legal aid remuneration payment guidelines, and the amendment was implemented on January 1, 2015, changing the CDCP remuneration to a fixed amount between NT$8,000 and NT$20,000. This amendment raised the CDCP attorney remuneration to the same level as the other legal aid cases, in hopes of improving the willingness to handle CDCP cases.
In addition, the original CDCP was implemented as a special program in response to the new debt clearance act to prevent overflowing applicants in the branch offices from affecting the general case business. However, CDCP applications have reduced since the initial implementation, so the reason for implementation as a special program no longer exists. Furthermore, taking into account that CDCP cases are in essence within the scope of legal aid, and there is no need for special planning, the Board of Directors of LAF approved the reclassification of CDCP cases as general cases ("the Reclassification") in November, 2014. The decision was implemented on January 1, 2015.
In addition to the important reforms such as the aforementioned Reclassification and raising of CDCP remuneration, in 2015, LAF continually held seminars for debtors, requested assistance from city and county governments, and held case press conferences in order to enhance promotion and to gain publicity for the CDCP service information of LAF. After raising remuneration for CDCP attorneys, the willingness to take such cases is estimated to increase. LAF considered it necessary to maintain the quality in case handling after the number of attorneys increased. Therefore, CDCP attorney training programs will continue in order to improve the professional aid quality, and monthly CDCP meetings will be held to establish a communication platform with the non-profit organizations. Regular communication, contact and exchange with the exterior communities regarding debtor issues and problems encountered in the application for legal aid would help in reviewing and correcting the related LAF regulations and planning so that LAF can help more disadvantaged debtors and comply with the purpose and mission of its establishment.
Mr. Wang was swindled and lost all of his savings of NTD 600,000. He had two young children and had to pay house mortgage and car mortgage so the expenses were high. His income was instable so he had to borrow money with his credit card to pay the family expenses, which caused him to owe debts. Later, he was divorced and had to raise the young children alone, meanwhile his debts kept increasing. Mr. Wang became exhausted both physically and mentally. In order to break free from the situation, Wang applied to LAF Yunlin Branch for CDCP aid, and an attorney assisted him in the negotiation and restructuring. Due to the failure by Wang to pay sufficient installment as required by the banking agency, the negotiations failed. The legal aid attorney then helped Wang to organize and weigh his income and expenses and filed a claim for restructuring to the court. Eventually the restructuring program was not accepted by the creditor's meeting; however, with the persistent request by the attorney, the court considered that the restructuring program suggested by Wang showed that he was already trying his best to clear his debts. The court granted the restructuring, and Wang was able free himself from the tremendous stress of debt, and could focus more on raising his children.
Legal Aid for Consumer Debt Clearance Program