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Seoul Rehabilitation
Individual rehabilitation in Seoul: what to check before filing
If your address or workplace is in Seoul, you file for individual rehabilitation with the Seoul Bankruptcy Court, and our Seoul Office is nearby at 156 Seochojungang-ro, Seocho-gu. Attorney Lim Jae Hyun, who holds a specialization in Insolvency registered with the Korean Bar Association, advises; call 1800-6719.
In Seoul, individual rehabilitation goes to one court, the Seoul Bankruptcy Court
If your address is in Seoul or you work regularly in Seoul, you file for individual rehabilitation with the Seoul Bankruptcy Court. If you repay your monthly income minus living expenses for 3 years as a rule, and 5 years at most, the remaining debt is discharged.
If wage garnishment is imminent, we consider a prohibition order first, before all the documents are gathered. Attorney Lim Jae Hyun, who holds a specialization in Insolvency registered with the Korean Bar Association (KBA) and works as a bankruptcy trustee for the Busan Bankruptcy Court, advises at the Seoul Office.
To consult in Busan or Changwon: Busan offices · Changwon Office
How your case proceeds
Consultation
We hear about your income, assets and how the debt arose, and choose the procedure
Filing
We submit the repayment plan and apply for a prohibition order
Correction and commencement
We supplement the materials the court asks for and obtain the commencement decision
Approval and discharge
Once you finish repaying under the approved plan, the debt is discharged
Requirements for individual rehabilitation at the Seoul Bankruptcy Court
| Requirement | Standard |
|---|---|
| Filing court | Seoul Bankruptcy Court if your address or regular workplace is in Seoul |
| Income | Continuing income such as wages, business income or pension |
| Total debt | Up to KRW 1 billion in unsecured debt and KRW 1.5 billion in secured debt |
| Insolvency | All your assets together fall short of your debts |
| Repayment period | 3 years as a rule, no more than 5 years |
| Prior discharge | If you received a discharge before, 5 years have passed since then |
Basis: Debtor Rehabilitation and Bankruptcy Act, Article 3(1); Act on the Establishment of Courts of Various Levels and Their Jurisdictional Districts, Appended Table 10
Seoul Rehabilitation Frequently Asked Questions
QWhen calculating repayments in Seoul individual rehabilitation, how much is allowed for living expenses?
A
The court sets the amount, and the rule is 60% of the standard median income. Disposable income is income minus taxes, health insurance premiums and living expenses for the debtor and dependents (Debtor Rehabilitation and Bankruptcy Act, Article 579, item 4), and the Guidelines for Handling Individual Rehabilitation Cases set 60% of the standard median income at the time of filing as the rule while allowing increases or decreases depending on circumstances (the same Guidelines, Article 7(2)). Expenses such as the number of dependents and medical costs are reflected only when supported by records.
QI am a freelancer and my income varies by month. How does the Seoul Bankruptcy Court calculate income?
A
The default is the monthly average over the last year. Under the Guidelines, income is calculated as the monthly average for the last year if there was no change of job during that year, or the monthly average since the change if there was one (Guidelines for Handling Individual Rehabilitation Cases, Article 7(1)), and income likely to be earned repeatedly is treated as business income whether or not it was reported (Debtor Rehabilitation and Bankruptcy Act, Article 579, item 3; Guidelines, Article 7-2(2)). Show that your income continues with deposit histories and tax filings.
QWhat does the rehabilitation commissioner check in the interview after the commencement decision?
A
Your assets and income, and whether the repayment plan is feasible. Under the court's supervision, the rehabilitation commissioner investigates the debtor's assets and income and runs the creditors' meeting (Debtor Rehabilitation and Bankruptcy Act, Article 602(1)), and the debtor must explain their assets, income and repayment plan when the commissioner asks (the same Article, paragraph 2). When a commissioner is appointed in a Seoul individual rehabilitation case, have pay slips, bank transaction histories and insurance surrender value records ready before the interview.
QCan I pay off the remaining balance in one go before the 3 years are up?
A
The Act has no separate provision on early full repayment, and under the statute the way to pay the remainder early is a proposal to amend the approved repayment plan (Debtor Rehabilitation and Bankruptcy Act, Article 619(1)). The amendment must again meet approval requirements such as paying creditors at least the liquidation value (the same Article, paragraph 2; Article 614), and once all repayments are complete, the court grants a discharge on application or ex officio (Article 624(1)). If you have received severance pay or another lump sum, first check the court's practice standards.
QDo private loans or money borrowed from acquaintances also have to go on the creditor list at the Seoul Bankruptcy Court?
A
Yes. The creditor list must state each creditor's name and address and the cause and amount of each claim (Debtor Rehabilitation and Bankruptcy Act, Article 589(2), item 1). Claims left off the list are excluded from discharge (Article 625(2), item 1), and leaving one out in bad faith can lead to discharge being denied altogether (Article 624(3), item 1). Claims of unregistered lenders are still claims, so list them, and report illegal collection separately.
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