[Jeon Daegyu's 7 Wins 8 Losses] Disclaimer, It’s Not Over Until It’s Over

Jeon Dae-gyu, Chief Judge of Seoul Bankruptcy Court

Kim Eui-kyung's novel "Youth Bankruptcy" is an autobiographical story depicting the protagonist's journey of overcoming debt collectors' persistent demands for repayment through cunning methods, even after being granted discharge by the court. In reality, debt collectors often exploit discharged debtors' lack of legal knowledge to extract money or abuse the situation by filing enforcement lawsuits and taking advantage of the debtor's failure to respond, thereby unjustly recovering discharged debts. When an individual receives a discharge decision from the court, they are no longer obligated to repay the debt. Creditors cannot enforce repayment against the debtor. However, if the debtor voluntarily repays the creditor for any reason after discharge, the repayment cannot be reclaimed. Let us consider how a debtor, who is harassed by creditors' demands despite having been discharged, should respond. Ms. Kim Ah-kyung (a pseudonym) filed for bankruptcy at the Seoul Rehabilitation Court, listing Bank A (credit 100 million KRW) and Bank B (credit 150 million KRW, which had already filed a lawsuit against her in 2019 and won) as creditors, and ultimately received a discharge decision.

First, if creditor Bank A files a lawsuit against Ms. Kim seeking payment of 100 million KRW, Ms. Kim can respond to the lawsuit by asserting that the debt has been discharged. Bank A will inevitably lose the case. The problem arises when Bank A does not file a lawsuit but persistently demands repayment of 100 million KRW day and night through various means such as phone calls or collection agencies. In such cases, Ms. Kim can file a declaratory judgment action against Bank A to confirm the discharge and free herself from this unstable position. Next, regarding creditor Bank B, since Bank B has already obtained a favorable judgment, it is unlikely to file another lawsuit. Instead, based on the confirmed judgment, Bank B may enforce collection by garnishing Ms. Kim's wages or other assets or threaten enforcement to demand repayment. In this case, Ms. Kim can file an objection to the claim against Bank B to exclude the enforceability of the existing judgment based on the effect of discharge.

Finally, if creditor Bank C demands repayment on the grounds that its 100 million KRW claim was omitted from the creditor list, Ms. Kim had acted as a guarantor for a friend who borrowed money from Bank C five years ago, and the repayment deadline passed two years ago. Nevertheless, Bank C took no action against Ms. Kim. Therefore, Ms. Kim assumed her friend had already repaid the debt and did not list Bank C's claim (guarantee claim) on the creditor list. Debtors must submit a creditor list when applying for discharge. In principle, debts omitted from the creditor list during the discharge process are also discharged. However, if the debtor maliciously omits a creditor's claim from the list, the debt is not discharged. In other words, if the debtor knowingly fails to list a claim on purpose, that claim is not discharged. In this situation, it is difficult to consider that Ms. Kim deliberately omitted Bank C's claim. Therefore, she can assert that the debt to Bank C has been discharged.

For reference, creditors are prohibited from engaging in collection activities such as enforcement, provisional seizure, or injunction against discharged individuals, knowing that the debt has been discharged. If a creditor violates this, they may be fined up to 5 million KRW. In "Youth Bankruptcy," the protagonist, who was tormented by debt collection, finds a simple wish upon meeting a loved one: "There was only one thing I wanted. Not social honor, a luxurious house, or absolute power. To live loving and being loved like an ordinary person. To not be chased by anyone, not be despised by anyone, and not be blamed for something I did not do. To not have to think about breaking up first when I like someone. To not be afraid of liking someone." There is a need to establish fundamental measures to prevent harassment through debt collection despite discharge.

This content was produced with the assistance of AI translation services.