Rehabilitation is a government-supported system in which eligible individuals receive a full write-off of interest on the debt or up to 90% of the principal when the debt cannot be repaid from income due to various personal circumstances.
After the coronavirus pandemic, there are many self-employed people who tried to raise a lump sum of money by investing in stocks and virtual currency, but their debt only increased. There are many cases where debt that cannot be repaid puts people at a crossroads of life or death or gives up economic activities altogether, so the country determines the forgiveness rate at the discretion of the court without coordination with creditors and seeks to ensure that only the portion that can be repaid is repaid. It is done.
Although it is a well-intentioned system, it is known that there are quite a few fraudulent applicants recently, so it is necessary to carefully check the qualifications for applying for personal rehabilitation.
1. Prepare and submit application documents containing personal information, property situation, list of creditors, etc., a debt repayment plan, and a statement so that the court can determine at a glance how the debt arose.
2. After reviewing whether the case is a suitable subject, the court decides to initiate disclosure and organizes the debtor’s situation in documents and serves them to the creditor. If you apply for an injunction, creditors’ debt collection will either stop or not occur, thereby maintaining a stable environment.
3. After attending the creditors’ meeting and confirming the facts within a short period of 15 minutes, if there are no objections, approval will be decided and the repayment will be made in earnest. The time it takes to determine approval is approximately 7 months, and the repayment period is 3 or 5 years, with a minimum of 2 years.
4. If you have paid all repayments in full, proceed with the application for exemption. After confirming the debtor’s repayment results, the court makes a decision to discharge the remaining debt.
Personal rehabilitation application qualifications
In reality, many people want to apply because it is a system that provides forgiveness of debt, but it can only be used if certain qualifications are met. The conditions can be looked at as follows.
1) You must generate a steady income. Since personal rehabilitation requires monthly repayments over a certain period of time, it is considered essential to have an income higher than the minimum cost of living.
2) Size of debt
3) If there is a history of exemption, it must have been 5 years.
Steady income generation does not necessarily mean that it can only be used by office workers. It also includes self-employed people, freelancers, and daily workers as well as anyone who generates regular income regardless of their occupation. Your debt must be at least 10 million won, unsecured debt must be within KRW 1 billion, and secured debt must be within KRW 1.5 billion.
Also, you must have more debt than assets. The list of assets includes real estate, deposits, deposits and stocks, and automobiles. If you are married, 50% of your spouse’s assets are included here, so if the distinction is ambiguous and difficult to distinguish, it is a good idea to get help from an insolvency lawyer to check for accuracy.
Personal rehabilitation, which can be filed at the court in your jurisdiction, can be a very difficult process to proceed alone without any relevant knowledge. Various documents and explanation materials need to be issued, and unexpected situations may arise, so it is necessary to prepare for them.
Therefore, it may be an efficient method to appoint an insolvency lawyer in advance and proceed with the process together.
The ultimate goal of rehabilitation is to cancel the remaining debt and start your daily life again.
Knowing the legal terminology and knowledge before proceeding or starting from a situation where you don’t can affect the forgiveness rate, so it is important to apply after careful review. Therefore, it is a good idea to first carefully check your personal rehabilitation application qualifications to see if you meet the conditions and check how the personal rehabilitation application process works before using it.
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Since there are a lot of documents that need to be prepared starting from the preparation of the repayment plan, there are cases where the process is given up or stopped midway, so it is recommended that you appoint an insolvency lawyer to assist you in order to save time and receive more favorable forgiveness.