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Individual Bankruptcy

Individual Bankruptcy

Individual bankruptcy in Busan: discharge when you cannot repay

Individual bankruptcy is for debtors who cannot repay with their assets and income, and a debtor living in Busan files for bankruptcy and discharge together at the Busan Bankruptcy Court. A discharge releases you from your debts, except some such as taxes, fines and child support.

With no income to repay from, you can start over through discharge

Individual bankruptcy is filed when your assets and income cannot cover your debts. A bankruptcy declaration alone does not erase the debt. You are released from liability only when discharge is granted in the discharge proceedings that follow.

Part of the lease deposit on the home you live in and assets needed for living costs can be excluded from the bankruptcy estate on request. The case is handled by Attorney Lim Jae Hyun, who serves as a bankruptcy trustee of the Busan Bankruptcy Court.

To consult in Changwon or Seoul: Changwon Office · Seoul Office

    CASE.1

    When your income is below living costs

    You have no income, or your income is below living costs, so there is no way to repay in installments.

    CASE.2

    When your debts exceed your assets

    Even all of your assets combined cannot pay off your debts, which is the state of insolvency.

    CASE.3

    When dependents leave nothing for repayment

    You have income, but after living costs for your dependents there is nothing left to repay with.

    CASE.4

    When you still have some assets

    You can file even if you own some assets. The bankruptcy trustee converts them to cash and distributes it.

    How your case proceeds

    Filing

    We file for bankruptcy and discharge together

    Bankruptcy declaration

    The court appoints a bankruptcy trustee

    Trustee review

    You explain your assets and how the debts arose

    Discharge

    The court decides whether to grant discharge

    Debts that remain after discharge

    Debt that remains Examples
    Taxes National tax, local tax
    Fines, forfeiture, administrative fines Criminal fines, administrative penalties
    Damages for an intentional tort Compensation for assault or fraud
    Employees' wages and severance pay Unpaid wages owed by a debtor who was an employer
    Child support and maintenance Child support for your children
    Claims knowingly left off the creditor list A private creditor deliberately omitted

    Basis: Debtor Rehabilitation and Bankruptcy Act, Article 566

    Individual Bankruptcy Frequently Asked Questions

    QIf my debts are discharged in individual bankruptcy, who pays them? Does the government pay for me?
    A

    No one pays on your behalf. Discharge is a decision that releases the debtor from liability for the debts remaining after distributions in the bankruptcy (Debtor Rehabilitation and Bankruptcy Act, Article 566), and creditors receive nothing beyond what is distributed from the bankruptcy estate. It is not a system in which the state repays, so a guarantor's liability stays in place (Article 567).

    QIf I file for personal bankruptcy in Busan, do I have to appear in court? What does the trustee ask in the interview?
    A

    The debtor must explain matters related to the bankruptcy when the bankruptcy trustee or the creditors' meeting asks (Debtor Rehabilitation and Bankruptcy Act, Article 321), and the court may set a discharge hearing date and summon the debtor (Article 558). The interview usually covers how the debts arose, any disposal of assets, and income and expenses. For Busan Bankruptcy Court cases, we prepare the materials with you at our Seomyeon Office.

    QAfter filing for bankruptcy, do collection calls and garnishments continue until the discharge decision?
    A

    Once bankruptcy is declared, bankruptcy creditors cannot exercise their rights except through the bankruptcy proceedings (Debtor Rehabilitation and Bankruptcy Act, Article 424), and compulsory execution or provisional attachment already placed on estate assets loses effect against the estate (Article 348(1)). Even after the bankruptcy is closed or terminated, no new compulsory execution is allowed until the discharge decision becomes final, and any pending execution is stayed (Article 557(1)).

    QIs it true that after a bankruptcy declaration I cannot do anything for 5 years?
    A

    The law sets no such period. Restrictions on qualifications that follow a bankruptcy declaration come from individual statutes, and once the discharge decision becomes final the debtor is automatically reinstated and freed from those restrictions (Debtor Rehabilitation and Bankruptcy Act, Article 574(1)1). When you can use financial services again depends not on a court decision but on credit information standards and each financial company's review.

    QIf I owe a few million won in unpaid taxes, am I barred from filing for individual bankruptcy?
    A

    You can still file for personal bankruptcy in Busan. The requirement for filing is insolvency (Debtor Rehabilitation and Bankruptcy Act, Article 305), and unpaid taxes are not listed as a ground that blocks a filing (Article 309). However, taxes remain owed even after discharge (Article 566, item 1), so you should plan in advance for a situation where only the taxes remain after discharge.

    QCan I file for personal bankruptcy in Busan and leave out one or two creditors?
    A

    No. The bankruptcy application must include a creditor list (Debtor Rehabilitation and Bankruptcy Act, Article 302(2)1), and claims knowingly left off are not discharged (Article 566, item 7). Submitting a false creditor list is also a ground for denying discharge (Article 564(1)3), so you must list everything, including money borrowed from family or friends.

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