Today, we will learn about the qualifications, methods, costs, and procedures for applying for personal rehabilitation. You can get up to 90% of your total debt reduced through debt forgiveness, but it may take several months and a certain amount of money is required, but it is a method that can be of great help in the long run.
And you can keep in mind that your property and real estate can be protected. All debts are subject to adjustment (stocks, gambling, personal debts, etc.), and it is possible to maintain social status and be free from creditors’ threats and collections.
What is personal rehabilitation?
Personal rehabilitation is for individual debtors whose total debt amount is less than KRW 1 billion in the case of unsecured debt and KRW 1.5 billion in the case of secured debt and who are likely to receive income continuously or repeatedly in the future for 3 years (Act on Debtor Rehabilitation and Bankruptcy) In the case of the proviso to Article 611, Paragraph 5 (5 years), this is a procedure whereby the remaining debt can be exempted if a certain amount is repaid.
Personal rehabilitation application qualifications
To qualify for personal rehabilitation, you must have more debt than assets and have a certain amount of income. You must be a salaried or business income earner and your secured debt is limited to KRW 1 billion or less and your unsecured debt is limited to KRW 500 million or less. Foreigners can also apply, but both Koreans and foreigners must repay the entire amount remaining after subtracting the minimum cost of living from the monthly average.
The difference from the bankruptcy discharge procedure is that after the discharge decision, the bad credit information can be canceled by the court without notifying the Federation of Banks, and you can be released from various seizures.
If you are worried that your family will be at a disadvantage, you can rest assured that there will be no disadvantage to your family or relatives (parents, spouse, children) when applying for rehabilitation. However, whether or not to maintain qualifications as a civil servant, teacher, doctor, or corporate executive varies from institution to institution, so it is recommended that you inquire directly with the relevant institution.
Nevertheless, you may not be fired due to the company’s own regulations, and financial institutions will only impose loan restrictions on you, and your family will not be affected at all. However, some loan companies may notify family members of delinquent payments, but this is an illegal collection and is subject to reporting to the Financial Supervisory Service.
Another major advantage is that the principal can be written off without creditor consent during the process, and all debts are subject to adjustment (including private loans). Additionally, if you are unable to engage in economic activity, you can use the bankruptcy system. For example, if you have lost the ability to work due to a severe disability, are unable to engage in economic activities due to old age, or are a recipient of basic welfare or are in the next lower class, you can file for personal bankruptcy and receive a full write-off of your debt.
You can also apply for gambling debt, such as a failed stock investment. Additionally, there is no problem even if your assets increase after the approval decision, and all normal banking transactions are possible. Rather, in the current situation, you are given the opportunity to take a leap forward, and it does not matter if you expand your business or get a job or change jobs.
However, you must have your own income and pay the repayment amount every month. In other words, you can decide whether to apply after determining whether you can consistently pay the repayment amount for three years. And if the above conditions are met, interest will no longer accrue.
How to apply for personal rehabilitation
Complete and submit the application yourself
The application must be written by hand (ghostwriting and computer writing are not allowed).
Please be careful when filling out the required information, as it will be invalidated if you omit it (in particular, write down your mobile phone number accurately).
The cost of issuing a debt certification document is borne by the financial institution, so it is free.
A repayment plan must be submitted within 14 days of the application for initiation of personal rehabilitation procedures, and a meeting date with the rehabilitation committee member is designated.
When applying for bankruptcy and discharge simultaneously, it takes about 4 months to decide on bankruptcy and 6 months to decide on discharge.
One thing to be careful of when applying for personal rehabilitation is that you must not provide a false address. Even if the facts are revealed later through a correction, problems may arise, so the address on your resident registration must be where you currently live. And as mentioned before, you must also carefully understand and write down your family’s financial status.
This is because if you intentionally write down the status of your assets, it may be dismissed. Lastly, and most importantly, the attached documents. Of course, you must prepare the basic documents, but you must also prepare any additional documents in advance.
That way, it can be submitted and reviewed quickly. However, the documents required by each law office may be different and may be omitted, so check carefully.
A method of paying a certain fee to a paralegal or lawyer and having them write on your behalf.
Use the support system from the Credit Recovery Committee
Personal rehabilitation application and free consultation and support
1. Seoul Financial Welfare Counseling Center
Seoul Financial Welfare Counseling Center (http://sfwc.welfare.seoul.kr) provides free financial counseling to people who want to recover from difficult situations. Centers are operated in each region, so you can receive counseling near you.
An experienced representative will be assigned to provide sincere assistance throughout the entire rehabilitation process, starting from the preparation of documents for rehabilitation. You can also appoint a lawyer free of charge from the Korea Legal Service and receive advice on whether the process is possible. We provide opportunities for recovery with help from staff with extensive experience in a variety of cases.
Inquiry: ☎ 1644-0120
2. Korea Legal Aid Corporation
The Korea Legal Aid Corporation (https://resu.klac.or.kr) operates branches and branch offices across the country, and there are separate Personal Rehabilitation and Bankruptcy Support Centers in Seoul and Daejeon. You can make a reservation in advance and visit a nearby office to discuss whether personal rehabilitation is possible for free. Most are located near the courthouse, making it convenient to visit, and provide friendly, professional counseling.
Inquiries: ☎132
3. Credit Recovery Committee
The Credit Recovery Committee (https://www.ccrs.or.kr/) also provides free consultation and application for personal rehabilitation and bankruptcy. There are branches in each region, so you can find the one closest to you and receive counseling. However, support is available only to those earning 125% or less of the standard median income and those whose debts incurred within the past year are 40% or less of the total debt.
After consulting to determine whether personal rehabilitation is possible for free, you can receive help with filling out documents and applying. Depending on the situation, delivery fees, stamp duty, etc. are also supported.
Inquiries: ☎1600-5500
caution
Tips for responding to illegal collection activities · If there is any doubt about the identity of the debt collector, check with the affiliated company or related association to see if the debt collector is employed. · If a collection creditor files a lawsuit or payment order, check the case number from the court. · If a debt collector comes to your home or office, do not panic and ask for the collector’s ID or take their business card. · Even if there is a parent-child relationship, there is no obligation to repay the debt.
Personal rehabilitation application process
Step 1: Submit personal rehabilitation application
Step 2: Appointment of rehabilitation committee members
Step 3: Prohibition/suspension order (interview)
Step 4: Discovery Decision (Court Account)
Step 5: Appeal period (creditors’ meeting)
Step 6: Approval of repayment plan (cancellation of prepayment)
Level 1
There are two main ways to file in person or by mail, and you can also easily file online through the e-litigation website. However, there are some things that are somewhat difficult to do on your own, such as the document preparation process or submission of correction documents during the process, so it is recommended to proceed after consulting with an expert.
If the submitted documents require supplementation and an order for correction is issued, you must prepare and submit it to the court within 14 days. If you do not do so within that period, it may be dismissed, so please be careful. There are two types of experts for correction orders: lawyers and paralegals. What is the difference?
Both are experts with nationally recognized qualifications, but their scope of work is different. In the case of lawyers, they have the authority to represent in court, and paralegals can only draw up contracts. In other words, since litigation representation itself is impossible, only legal advice is available, and actual legal assistance must be obtained from a lawyer.
Step 2
The rehabilitation committee member will assign a case number when an application for personal rehabilitation is received by the court. You can also check the current progress by searching the case number on the Supreme Court’s My Case Search site. Additionally, once the decision to open is made, you will be contacted by text message or phone call on your cell phone, so if your contact information changes, you must update it immediately.
Step 3
You may have suffered from pressure over debt from banks, etc., but you do not have to worry anymore as the injunction order is usually reached within a week after being served, and thereafter, all compulsory execution procedures (collection actions by creditors) such as reminders and seizures are prohibited.
Step 4
You must pay monthly according to the repayment plan submitted at the time of application for personal rehabilitation, and if you faithfully pay during the specified period, the remaining amount will be forgiven.
Step 5
Most interview dates are omitted. However, implementation is determined depending on the judge’s inclinations, and correction orders and summons for interview dates may be sent unexpectedly, so you must always be careful.
Step 6
The usual procedures are as above and are largely the same in any court and may vary depending on the workload of the relevant court.
The most important criterion for selecting a law office is the location of the office. It is best to avoid broker offices that only process applications by mail without visiting or that specialize only in consultations.
You should choose a place where you can proceed responsibly with an appropriate fee, rather than a place that demands a high seniority fee just for the purpose of receiving the contract. Also, please contact a lawyer with extensive experience in rehabilitation bankruptcy cases and choose an office that can help you with exemption from liability after approval.
Personal rehabilitation application cost
The cost of applying for personal rehabilitation is usually set between 1.5 million won and 2.5 million won. There may be some differences between law firms, but it is best to avoid places that offer unreasonably low fees. If the price is low, the repayment amount paid to creditors is likely to be higher.
The standard for determining the fee is determined by combining various factors such as the lawyer’s experience, skills, and know-how, the number of creditors or amount of debt, and the client’s situation. In addition, the delivery fee (including stamp fee) paid when filing with the court, the stamp fee of approximately 50,000 won for the debt certificate issuance fee, and the appointment fee of approximately 100,000 won for an external rehabilitation committee member (may be charged separately if there are many creditors or are complex) are incurred separately.
However, in some cases, the office of an unqualified broker who lacks experience in rehabilitation cases requests additional amounts.