Supreme Court Introduces Personal Debt Write-off Plan

An “individual credit revival system” set up by the Supreme Court to relieve the financial burden on credit delinquents with personal debt of under 1.5 billion won will take effect starting on September 23.

The Supreme Court announced on Tuesday that they have already decided on the regulations for the detailed policy and procedures of the system, and that the arrangements are moving ahead full-scale for the policy’s management, with 32 judicial departments taking exclusive charge over this system being placed in the 14 district courts throughout the country, including the Seoul Central District Court.

The individual credit revival system is being run by the Supreme Court, and is more comprehensive than the systems carried out by the financial supervisory organizations. The amount of debt relieved is far higher and has the advantage that if the repayment is done in earnest by the plan, the principal can be exempted. For these reasons, it is expected that many credit delinquents will be using this system.

Also, this system is different from the existing individual bankruptcy system in that debt can be adjusted without the social stigma of bankruptcy following the adjudication.

Those who are able to use this system must have personal debts of under 1.5 billion won (secured debts under one billion won, unsecured debts under 0.5 billion won) and must be salary income earners or income earners from business (personal and independent).

The repayment period is to be three years at the minimum and eight at the maximum, and if the repayment plan is completed, the court will grant an exemption in which the debtor will be exempted from the rest of the debt.

However, if the repayment plan is not carried out, or if it is found that the exemption from the court was granted dishonestly, the exemption will be revoked.

If the repayment plan is not accepted by the court or if the revival procedure is stopped during the middle of its course due to non-execution, re-application is prohibited for five years. If an exemption is granted, there cannot be a re-application for 10 years.

Kim Hyung-doo, a researcher for court affairs at the Supreme Court, said, “Credit delinquents should carefully go through the relief system to find the right one for him/herself before making a choice.”

jin0619@donga.com