Is Amicable Debt Collection Legal in China?
In China, any institution can engage in debt collection activities without a license from the government. However, collecting financial debt (mainly consumer debt) shall observe certain rules. There are no special restrictions for collecting commercial debt, i.e., non-financial debt.
I. General rules
Collection institutions shall obtain authorization from creditors and collect debts within the scope of authorization.
Collection institutions can only collect legal debts. If a collection institution collects illegitimate debts in illegal ways, it will constitute the crime of collecting illegitimate debts. These illegal ways include violence, coercion, restriction of others’ personal freedom, home invasion, intimidation, stalking, and harassment.
II. Special restrictions on the collection of financial debts
Collection institutions shall not use the personal information of debtors illegally during the collection of financial debts.
Financial institutions shall not provide or disclose information on customers’ arrears in violation of laws and regulations when collecting debts, nor collect from unrelated third parties (such as relatives or friends of debtors).
Financial institutions shall at least uniformly publish the name, contact information and other relevant information of commissioned debt collection institutions on their official channels.
III. Self-discipline rules of industry associations
Some industry associations in the field of financial debt collection have formulated self-discipline rules so as to promote collection institutions to adopt proper means for debt collection.
- Collectors shall behave politely and dress appropriately, and shall not use rude language and behaviors;
- Collectors shall conduct debt collection at the right time and shall not frequently harass debtors and other persons;
- Collectors shall not threaten debtors and other persons in an unlawful manner;
- Collectors shall not harm debtors and other persons, nor damage or plunder their property; and
- Collectors shall not disclose the debt information of debtors to persons other than the debtors.
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