Seoul Rehabilitation Court Shortens Repayment Period for Jeonse Fraud Victims' Personal Rehabilitation

The Seoul Bankruptcy Court has revised its practical guidelines to allow victims of Jeonse fraud entering personal rehabilitation procedures to typically reduce the repayment period to around two years, effective from the 1st of next month. On the 29th, the Seoul Bankruptcy Court announced that it had prepared support measures for Jeonse fraud victims and conducted opinion surveys and briefing sessions for judges in charge of personal insolvency and internal and external rehabilitation committee members, planning to implement these support measures starting from the 1st of next month.

Seoul Rehabilitation Court, Seocho-gu, Seoul.
[Photo by Yonhap News]

Personal rehabilitation is a system that reduces a portion of debt burdens only for individuals who have income but find it difficult to repay their debts. The monthly repayment amount is determined by subtracting living expenses and other costs from income, and if repayments are made without default during the repayment period, the remaining debt can be forgiven. Tenants who have not received their Jeonse deposit back are socially and economically very vulnerable. This is because most victim tenants use a significant portion of their assets as Jeonse deposits or prepare Jeonse deposits through Jeonse loan financing from financial institutions. According to the Ministry of Land, Infrastructure and Transport’s Jeonse Fraud Victim Support Committee, as of the 18th, the total number of approved cases involving Jeonse fraud victims is 3,508.

The Bankruptcy Court has allowed the repayment period to be set at less than three years if the debtor is a Jeonse fraud victim. Accordingly, it is expected that the practical repayment period will generally be set at around two years. Victims recognized under the Special Act on Support for Jeonse Fraud Victims and Housing Stability are expected to receive such benefits. Furthermore, the plan is to reduce the repayment burden by not reflecting the Jeonse deposit that the victim cannot receive in the liquidation value. However, support may not be applied depending on the proportion of Jeonse fraud damage in the total debt amount and other factors.

A representative of the Seoul Bankruptcy Court stated, "Jeonse fraud victims are 'diligent but unfortunate debtors' who must repay the full Jeonse loan despite not being able to recover their deposits, so support is necessary for their economic recovery."

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