개인워크아웃 조건C.S.Lewis
Minhoe Jeong, Representative Attorney at Law Office Leeum
hello. My name is Jeong Min-hoe, the representative attorney of Eum Law Office. Today, we would like to cover the differences between personal rehabilitation and personal workout systems, the pros and cons, and precautions when proceeding with each procedure.
Personal workout, also called debt adjustment, is a system applied to the Credit Recovery Support Committee. When a personal workout application is submitted to the Credit Recovery Support Committee, the committee reviews the application submitted by the debtor and adjusts the financial institution’s debt to a certain extent, giving the debtor an opportunity to recover economically.
There are four representative conditions for applying for personal workouts:
1. Debt repayments such as loans and credit card payments are overdue for more than 3 months
2. The amount of debt incurred in the last 6 months exceeds 30% of the total amount of debt
3. Unsecured debt is KRW 500 million or less, secured debt is KRW 1 billion or less, and total debt exceeds KRW 1.5 billion
4. Steady income generation during the workout period
The advantage of personal workouts is that the process is not complicated or difficult from the first application, so it is easy to proceed. The second advantage is that interest on the debt principal is reduced. And lastly, if you have faithfully repaid for more than two years, there are advantages such as being able to receive credit recovery early (however, even after early credit recovery, you must continue to the end of the remaining period).
However, the downside is that the debtor must be tied to the workout system for a long time because the period is up to 8 to 10 years. Additionally, one of the disadvantages is that debts to financial companies and personal debts that have not entered into an agreement with the Credit Recovery Support Committee cannot be included in the debt adjustment target.
When conducting a personal workout, you must consider the pros and cons and requirements listed above.
Personal rehabilitation is a system to promote the efficient rehabilitation of the debtor and the interests of creditors by forcibly adjusting the legal relationship with creditors through the court on the basis of the debtor’s continued income in the future.
The requirements for applying for personal rehabilitation are as follows.
1. Continuous generation of income through salary or business income
2. Unsecured debt of 1 billion won or less, secured debt of 1.5 billion won or less
3. Liabilities exceed assets
4. Overdue period required
5. If an exemption decision is received, a period of 5 years has elapsed.
Furthermore, although there are some differences in the advantages of personal rehabilitation depending on how the debt was incurred, the biggest advantage is that the debt forgiveness rate is generally higher than that of workouts. In addition, there are advantages such as stopping preservation measures and compulsory execution from creditors, all creditors can be included in the list of creditors regardless of creditors, and property can be maintained within the scope of not exceeding the repayment amount.
However, the disadvantage is that, unless there are special circumstances, all money other than the household’s minimum cost of living must be used as repayment.
Additionally, the procedure is somewhat complicated, so if the rehabilitation committee members’ requests are not properly responded to, the rehabilitation application may be dismissed.
In personal rehabilitation procedures, all creditors must be included in the list regardless of their type, form, or content. Therefore, if there is a bank-secured debt for a house, consult with the above-mentioned secured bank creditors before applying, and conduct a voluntary auction based on the decision to initiate personal rehabilitation procedures. must be prevented from proceeding.
In addition, gambling and wasteful debts such as stocks and coins are reflected in the debtor’s liquidation value, and the debtor must use a higher amount of money than the reflected liquidation value as a repayment source, so specific details such as these must be carefully reviewed.
In addition, there are many things to pay attention to when proceeding with personal rehabilitation, so those who are preparing for personal rehabilitation should seek counseling to find ways to deal with it and be careful to avoid having their application rejected.
Above we have learned about personal workouts and personal recovery systems.
Based on the information explained above, we hope to achieve good results by following the appropriate procedures for the situation.
Leeum Law Office
30 Dunsanjung-ro 78beon-gil, Seo-gu, Daejeon
Based on our practical experience, we share information on corporate bankruptcy and corporate rehabilitation. Law Office Lee Eum Representative Attorney (Phone: 042-471-7724) Bankruptcy/Court Administration/Personal Rehabilitation Bankruptcy/Inheritance/Limited Approval
