The personal rehabilitation system, which is designed to support individuals suffering from large amounts of debt, is a system where the court provides relief by adjusting the debt. Through this, you can receive a discount on interest by up to 100% and a discount on principal by up to 90%. Today, we will learn more about the eligibility conditions to apply for personal rehabilitation.
In addition, self-diagnosis is possible through the Korea Legal Aid Corporation to check the conditions for personal rehabilitation. Please check in advance whether you are eligible through the link below.
Personal rehabilitation – application qualifications – conditions – free consultation
What is personal recovery plan?
The personal rehabilitation system is a system to support debtors experiencing difficulties, and its role is to restructure debts taking into account the debtor’s economic situation. This system helps borrowers meet basic living expenses by guaranteeing a minimum cost of living.
Personal rehabilitation is for individual debtors whose total debt is less than 1 billion won for unsecured debt and 1.5 billion won for secured debt. For those who can continue to earn a certain amount of money in the future, it reduces their financial burden through a process that allows them to get rid of the remaining debt if they meet the conditions of repaying a certain amount over three years.
Personal rehabilitation – application qualifications – conditions – free consultation
Conditions for personal rehabilitation application
1. Causes and concerns of bankruptcy (insolvency)
– In order for a debtor to apply for personal rehabilitation, there must be concerns about the cause of bankruptcy or the possibility of bankruptcy. It mainly refers to a situation where one is in a state of insolvency or has the possibility of being insolvent.
– Insolvency represents an objective condition in which a debtor lacks the ability to pay debts as scheduled and is therefore unable to fulfill obligations immediately.
– ‘General and continuing insolvency’ means the inability to pay the entire debt as agreed, which will continue and indicate that recovery is unlikely.
– Insolvency can occur when liabilities exceed assets, but this is not always the case. Comprehensively, it evaluates the income that can be expected in the future by considering the debtor’s age, occupation, experience, qualifications, skills, labor force, etc.
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
2. Application for personal rehabilitation with individual debtors
– Applicants must meet the eligibility requirements for individual debtors. Debtors applying for personal rehabilitation must be classified as individual debtors.
– Corporate entities (stock companies, limited companies, incorporated associations, foundations, etc.) cannot utilize the personal rehabilitation system.
3. Total debt limit
– If the total debt exceeds KRW 1.5 billion in secured debt and KRW 1 billion in unsecured debt, personal rehabilitation is not available.
– Debts related to personal rehabilitation claims that are guaranteed by collateral are called secured liabilities. In contrast, debts related to personal rehabilitation claims that do not have any collateral are called unsecured debts.
– If you have no secured debt and your unsecured debt is KRW 1.1 billion, you cannot apply for personal rehabilitation.
4. Salary earner or business income earner
– Salary earners refer to individuals who can expect stable and predictable income, such as a salary or pension received at regular intervals.
– Operating income earners refer to individuals who can continue to earn income in the future, such as real estate rental income, business income, agricultural income, forestry income, etc.
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
5. Disposable income (= income – cost of living)
– The personal rehabilitation process involves repaying debts using available income for three years.
– Disposable income refers to the remaining amount after subtracting living expenses from income, and living expenses refers to the minimum cost of living determined by the National Basic Living Security Act.
– All disposable income must be used to repay debt, so you must have disposable income to apply for personal rehabilitation. If you lack disposable income, you may need to consider filing for bankruptcy.
※ Minimum cost of living in 2023
Number of people in the household Minimum cost of living (monthly)
One-person household 1,246,735 won
Two-person household 2,073,693 won
3-person household 2,660,890 won
4-person household: 3,240,578 won
5-person household 3,798,413 won
6-person household 4,336,789 won
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
◈ Personal rehabilitation period
To apply for personal rehabilitation, you must meet all the conditions mentioned above. Afterwards, the personal rehabilitation process begins and the repayment plan must be approved. Typically, this process will discharge the balance of your debt after you have paid it for three years.
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
◈ How to apply for personal rehabilitation
To apply for personal rehabilitation, you generally need to submit an application to the district court corresponding to your address. In the Seoul area, you can apply to the Seoul Rehabilitation Court.
Personal rehabilitation – application qualifications – conditions – free consultation
● Personal rehabilitation procedure and application form: The first thing to do is to fill out the personal rehabilitation procedure application form. This application must include information such as the debtor’s name, resident registration number, address, purpose and reason for application, debt and asset information, home and work phone numbers, and mobile phone number.
● Attach asset and debt information: A list of assets and a list of personal rehabilitation creditors must be attached to the application. In addition, you must write the following: “I am responsible for the same debts as listed in the attached personal rehabilitation creditors list, and my assets are as listed in the attached property list.”
● Personal rehabilitation application documents: The forms required to apply for personal rehabilitation can be viewed and downloaded from the form collection at the Korean Court Electronic Civil Service Center.
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Free personal rehabilitation 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
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
Personal rehabilitation – application qualifications – conditions – free consultation
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