If a Debtor Repays debt Sincerely for 5 years, the Rest Will Be Written Off

‘Individual Recovery System’ that a self-employed or wage income earner under bankruptcy try their best for 5 years to repay the debt, then the rest of debt is remitted will be introduced from the next year.

The existing composition system will be abolished, and the companies under the court control will be operated by the existing management principally, but the process of restoration or liquidation of bankrupt companies will be performed fast.

At 29th, according to Ministry of Justice and Ministry of Finance and Economy, the government decided to integrate the regulation of company liquidation, composition and liquidation as one regulation and the draft of ‘liquidation regulation’ for individual recovery system. Individual Recovery System is a kind of ‘Court Control System for Individual’. It will be applied broadly to help a bad debtor for many financial institutes to repay them the debt. So it can be called ‘Personal Workout System’.

The government will have public hearing about the draft at 6th of the next month and take the step to legislate the bill via the notice of legislation, review in National Administration Meeting and submit to the first meeting of National Assembly in the next year.

The liquidation regulation will be composed of 6 chapters such as ▽provisions ▽restoration of debtor ▽international liquidation ▽penal and supplementary provisions. The restoration of debtor and the process of liquidation will be applied to individual as well as to corporation.

The procedure of individual restoration will be applied to the wage income earner or self employed who can maintain continual income by applying ‘Beginning Apply’.

If a court decides the beginning of individual restoration procedure, the person concerned can manage and dispose the asset belong to Individual Restoration Fund (present asset and 5 years income in the future) at his discretion.

The debtor should submit reasonable and reliable repayment plan to the court within 14 days, but repayment period should not be over 5 years from the beginning day of the repayment.

Even if the creditor makes an objection to the plan, the court can make final decision by considering the total amount paid and other factors.

If the debtor repaid for 5 years according to the repayment plan, the court decided the exemption. If the debtor did not practiced the repayment plan until the final day because of uncontrollable matter, the court can decide the exemption by considering if the paid amount is bigger than amount to be paid.

Kwang-Hyun Kim Kwang-Am Cheon kkh@donga.com iam@donga.com