Against the backdrop of China’s profound market economy transformation, excessive indebtedness and judicial enforcement dilemmas have emerged as prominent issues constraining economic development. Notably, rooted in traditional Chinese governance wisdom, folk debt resolution practices—through mechanisms such as debt relief, integrity-based penalties, and essential livelihood safeguards—have formed a uniquely Eastern approach to debt resolution. Building on the pioneering exploration of the Shenzhen Special Economic Zone’s Individual Bankruptcy Regulations, the organic integration of traditional governance wisdom with modern rule-of-law principles can establish a personal bankruptcy system with Chinese characteristics that balances fairness and efficiency while protecting rights.