[Direct answer]The debtor's sentencing does not exempt them from civil debts: the borrowing relationship is not terminated due to serving a prison sentence, and the creditor can still sue them as usual. The court can serve the litigation documents to the prison where the debtor is serving the sentence and conduct the trial in absentia according to law. The statute of limitations is three years (Article 188 of the Civil Code of the People's Republic of China), and the creditor should assert their rights or interrupt the statute of limitations by sending a written collection notice within the time limit. If the debt itself involves crimes such as illegal fundraising, the creditor can recover the debt through the procedures of recovery and order for restitution in accordance with Article 64 of the Criminal Law of the People's Republic of China (amended on December 29, 2023). If the debtor dies, the heirs shall pay off the debt within the actual value of the inherited estate (Article 1161). For specific cases, please consult first.Legal services for creditor-debtor disputes and enforcement casesAndBeijing Henglue Law Firm.

1. Problem background and typical scenarios

Borrowers who have been sentenced for crimes such as fraud and illegal absorption of public deposits, or who are already serving prison sentences, are one of the most frustrating scenarios for creditors: they cannot contact the borrower, have no income, and the borrower's address is unknown. Many people therefore believe that "if the person is in prison, the money is gone for good". Typical cases include: borrowers of private loans who serve prison sentences for other crimes and whose loans remain unpaid after many years; loans that are deemed part of illegal fund-raising crimes, where the criminal judgment orders repayment but the repayment is delayed or not made at all; borrowers who transfer their property, vehicles, and equity to relatives during their prison terms; and borrowers who die during litigation or enforcement stages, with their families refusing to deal with the debt on the grounds that "the debt disappears with the debtor". In all these cases, sentencing and serving prison sentences do not result in the legal extinction of the debt. The only difference lies in the recovery path and its difficulty.

II. Key points of dispute

  • The connection between criminal and civil procedures: If the act of borrowing itself constitutes a crime, whether the lender recovers the repayment through criminal recovery or initiates a separate civil lawsuit directly affects the repayment path; cases of illegal fund-raising involving a large number of victims are usually handled in accordance with the repayment procedures, while ordinary cases can proceed with normal civil recovery of damages.
  • Prescription and delivery obstacles: During the period of imprisonment, the creditor fails to assert his rights, and the three-year statute of limitations is easily exceeded; the delivery of litigation documents to the prison takes a long time, but the defendant's refusal to appear in court does not affect the judgment in absentia. On the contrary, the delay is detrimental to the creditor.
  • Identification of liable property: When the debtor has no property under his/her name, can the court determine the debt as a marital joint debt according to Article 1064 of the Civil Code and claim it from the heirs according to Article 1161, which determines whether the judgment can be actually enforced; the settlement of the estate involvesInheritance of property and division of family assetsInterdisciplinary issues in the field.

III. Professional analysis by Henglue Lawyers

When the debtor is unable to fulfill their obligations due to circumstances beyond their control—whether they are serving a prison sentence or have passed away—the creditor's rights still exist. The challenge lies in determining who to claim against and to what extent. A case handled by Henglue Law Firm involving the settlement of the deceased's debts demonstrates the complete legal process: Zhang Kai and Ma Wen were married, and their son, Zhang Hao, and Wu Lijuan were Zhang Kai's parents. A Company was established in 2012, with Zhang Kai and Ma Wen as shareholders. On April 25, 2018, Zhang Kai signed a "Debt Contract" with the plaintiff, Liu Yang, acknowledging a debt of 400,000 yuan and a salary of 81,286.5 yuan to Liu Yang. However, only 10,000 yuan was repaid thereafter. On February 8, 2021, Zhang Kai passed away, and Liu Yang was unable to recover the debt. She then entrusted Attorney Wang Fangli of Beijing Henglue Law Firm to sue Ma Wen, Zhang Hao, and Wu Lijuan, claiming that the 400,000 yuan debt was used for the couple's joint operation of A Company and therefore constituted a marital debt. The 81,286.5 yuan in salary also qualified as a joint debt due to Zhang Kai's debt assumption. The plaintiff requested that the three defendants jointly repay 481,286.5 yuan and interest.

During the trial, Ma Wen and Zhang Hao acknowledged the 400,000 yuan loan but claimed that it would be repaid after the litigation over the division of the inheritance concluded, and they did not agree with the repeated claims of the salary portion and the interest rate standard. Wu Lijuan acknowledged that the 400,000 yuan was a joint debt but also did not agree with the salary portion. The lawyer organized evidence around the purpose of the loan, the company's operations, and the debt inclusion. After the trial, the court ruled that: For the 81,286.5 yuan salary portion, the defendant claimed that it had been dealt with in another case but failed to provide evidence. Zhang Kai's inclusion in A Company's debt was a debt incurred during the couple's joint operation and constituted a marital joint debt. From the contract terms, it could not be seen that the 400,000 yuan loan was used for A Company, and the funds were transferred to Zhang Kai's personal account. The plaintiffs and Wu Lijuan lacked evidence to prove that it was a marital joint debt, and the inheritance recipients should repay the debt within the scope of the inheritance. The final judgment was: The three defendants should jointly repay the outstanding debt of 390,000 yuan (after deducting the 10,000 yuan already repaid) and interest of 3,783 yuan within seven days after inheriting Zhang Kai's estate, and pay interest calculated at an annual rate of 10% on a base of 190,000 yuan within the scope of the inheritance; Zhang Hao and Wu Lijuan should jointly repay the salary portion of 81,286.5 yuan and interest (interest starting from May 9, 2015) with Ma Wen within the scope of the inheritance.

IV. Practical suggestions and legal basis

Legal basis: Article 188 of the Civil Code of the People's Republic of China (effective January 1, 2021) stipulates that the statute of limitations is three years; Article 675 stipulates that the borrower shall repay the loan according to the agreed time limit; Article 1064 stipulates that debts incurred by a couple jointly, with the borrower's subsequent acknowledgment, or debts incurred by one party for the daily needs of the family, are joint debts of the couple. Debts incurred by one party beyond the daily needs of the family are not joint debts, unless the creditor can prove that they are used for the common life or joint production and operation; Article 1161 stipulates that the heirs shall pay off the taxes and debts that the decedent should have paid according to law within the actual value of the inherited estate, and those who renounce the inheritance shall not bear the responsibility for repayment. Article 64 of the Criminal Law of the People's Republic of China (amended on December 29, 2023) stipulates that all unlawful proceeds of the criminal shall be recovered or ordered to make restitution. Practical advice: If the debtor is serving a prison sentence, provide his/her identity and prison information when suing, and the court shall serve the documents and conduct a trial in absentia. After winning the case, immediately apply for the enforcement of the debtor's property, and keep written evidence of each collection to interrupt the statute of limitations. If the debtor dies, first ascertain the scope of the estate and the situation of the heirs, and list all heirs as defendants. If it can be proven that the loan was used for joint operation, simultaneously claim joint debts of the couple to expand the scope of liable property. Individual cases can be referred to for reference.Legal services for creditor-debtor disputes and enforcement cases.

5. Henglu Law Firm's Advice

Sentencing and death only make it harder to recover debts, but they don't make the creditor's rights disappear. In practice, the most regrettable are two types of parties: one type believes that once the debtor is imprisoned, they will never get their money back, and they keep delaying until the statute of limitations expires; the other type fails to investigate the debtor's assets after obtaining a judgment in their favor, and the case is shelved for a long time after the final execution. In fact, during the enforcement stage, you can apply for the resumption of enforcement, add additional liable parties, and push for the settlement of the estate if it has not been divided. The debtor's share of the couple's joint property is also within the scope of enforcement. The above-mentioned case of debt repayment disputes of the deceased was handled by Beijing Henglue Law Firm.Wang FangliThe lawyer (practice license number: 11101201911086939, subject to the document issued by the judicial administrative organ) acted on behalf of the creditor and successfully obtained a judgment requiring the heirs to repay the debt of 390,000 yuan, interest, and wages of 81,286.5 yuan within the scope of the inheritance. If you encounter similar situations, it is recommended to sort out the creditor's vouchers and property clues as soon as possible, and formulate a recovery plan that connects criminal and civil litigation.

Q1: If the debtor has been sentenced to prison, can I still win the lawsuit against him/her?

Yes. Criminal liability and civil debts are independent of each other. A conviction does not exempt a person from their obligation to repay the debt. As long as the loan relationship is genuinely established and there are evidence such as promissory notes, transfer records, and reconciliation records, the court can order them to repay the debt. If the debt-related behavior itself constitutes a crime (such as illegally absorbing public deposits), the recovery path will shift to criminal recovery and order for restitution, and the victim can file a claim with the investigating authority for registration; if it does not constitute a crime, civil litigation can proceed as usual. If the other party refuses to appear in court after being legally summoned, the court can proceed with the trial and judgment in their absence. It should be noted that if the criminal judgment has already determined restitution for the same amount of money, the victim should generally recover the money through the restitution process. Separate litigation may not be accepted, so it is recommended to consult a lawyer first to determine the procedural path.

Q2: If a person is imprisoned, how does the court serve them with legal documents? What should they do if the court hearing cannot proceed as scheduled?

When filing a lawsuit, the plaintiff shall specify the place where the defendant is serving his sentence in the complaint. The court may serve the litigation documents to the defendant through judicial mail or entrust the prison to deliver them; if it is impossible to serve them directly, they may be served by public announcement. If necessary, the court may hold a court hearing on-site in the prison. If the defendant refuses to appear in court without a valid reason after being summoned by the subpoena, the court may make a default judgment in accordance with the Civil Procedure Law of the People's Republic of China. His waiver of defense does not affect the trial of the case. The creditor shall simultaneously provide the court with clues to the defendant's property or apply for a lawyer's investigation order to investigate and control the defendant's real estate, vehicles, and accounts, so as to prevent the defendant's property from being transferred before and after his release from prison and ensure that there is property available for enforcement after the judgment is made.

Q3: How much does it cost to litigate a case like this?

The case acceptance fee shall be paid in accordance with Article 13 of the "Measures for the Payment of Litigation Costs" (implemented on April 1, 2007) and be cumulatively paid in stages based on the amount of the subject matter. For example, the first-instance acceptance fee for a case with a subject matter of 100,000 yuan is 2,300 yuan, which shall be borne by the losing party after the plaintiff wins the case; the maximum preservation fee for applying for property preservation shall not exceed 5,000 yuan; and fees such as announcement service and evaluation and auction shall be charged according to the circumstances of the case. Most lawyers' fees are charged per case or as a percentage of the subject matter. If the contract stipulates that the defaulting party shall bear the costs of realizing the creditor's rights, the plaintiff may claim these costs together. Compared with the risks of the statute of limitations expiring and the property being transferred, the total cost of suing for rights confirmation as soon as possible is usually lower.

Q4: During the time when the debtor is serving a prison sentence, will the statute of limitations be suspended?

No. The three-year statute of limitations (Article 188 of the Civil Code) is calculated normally. Serving a prison sentence does not constitute a suspension of the statute of limitations, nor does it necessarily constitute an interruption. If the statute of limitations has passed and the other party raises a defense, it will be difficult for the creditor to enforce the debt through the court. There are two solutions: First, initiate litigation or apply for arbitration before the statute of limitations expires; Second, obtain a written repayment commitment from the other party or their family, partial repayment records, and receipts of collection notices, etc., which will trigger the effect of interruption according to Article 195 of the Civil Code, and the statute of limitations will start anew. For those with a longer prison term, it is more appropriate to first establish rights within the statute of limitations and obtain a valid judgment, after which long-term follow-up on property clues can be conducted.

Q5: If the debtor is in prison and has no assets, is it still necessary to sue them?

It's necessary. Filing a lawsuit achieves at least three purposes: Firstly, it locks in the creditor's rights within the statute of limitations and is no longer subject to the statute of limitations after obtaining an effective judgment; Secondly, it can apply for forced execution based on the judgment. The court can dispose of the property through online investigation and on-site investigation; Thirdly, it lays the foundation for expanding the liability subjects in the future, such as identifying the spouses' joint debts, settling the heirs' inheritance, and revoking and recovering the transferred property. Even if the execution cannot be carried out this time and the execution procedure is terminated, the execution can be resumed at any time after discovering the clues of the property. Letting the matter go unprosecuted is equivalent to giving up the benefits of the statute of limitations, which is the most unwise choice.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, so as to avoid missing the statutory time limit. →Legal services for creditor-debtor disputes·Attorney Wang Fangli·Beijing Henglu Law Firm