Individual Rehabilitation Procedure
Individual Rehabilitation — Three Years, Then a Fresh Start
For wage-earners and self-employed individuals with regular income, the DRBA's individual rehabilitation procedure offers debt reduction and a three-year (formerly five-year) repayment plan, with discharge of the unpaid balance on completion. The 2018 amendment reduced the standard repayment period from five years to three.
Based on · DRBA Part IV · Seoul Rehabilitation Court Practice Rules · Rehabilitation Commissioner ManualsEligibility
Three Statutory Requirements
Individual rehabilitation is available to natural persons who satisfy all three of the following conditions under DRBA Article 579.
Natural Person With Regular Income
A natural person with continuing or regular income — including wage-earners, self-employed professionals, and certain freelancers with stable monthly earnings.
Debt Within Statutory Caps
Secured debt of no more than KRW 1.5 billion and unsecured debt of no more than KRW 1 billion. (Limits last amended in 2021.)
Inability to Pay
Unable to pay debts as they fall due, or facing imminent insolvency; reasonably able to perform a three-year repayment plan from disposable income.
Stage by Stage
Six Stages of Individual Rehabilitation
Petition for Commencement (DRBA Art. 588)
The debtor files a petition with the rehabilitation court. The petition is accompanied by a financial disclosure, a schedule of creditors, evidence of income, and an outline of the proposed repayment plan. A court deposit covers the rehabilitation commissioner's fee.
- Petition and statement of reasons
- Statement of property and liabilities
- Schedule of creditors
- Evidence of income (three months — pay slips, tax certificates)
- Outline of the repayment plan
Stay Order (DRBA Art. 593)
The court ordinarily issues a stay order on enforcement against the debtor. Wage garnishment ceases; existing executions and provisional measures are halted. A comprehensive prohibition order may follow if needed.
- Stay on wage garnishment
- Halt to existing executions and provisional attachments
- Bar on new individual enforcement during the procedure
- Bar on creditor harassment under separate provisions
Commencement Order and Rehabilitation Commissioner
The court appoints a rehabilitation commissioner to verify income, expenses, and assets, and to oversee the repayment plan. The commissioner reports to the court and serves as the disbursing agent for monthly repayments to creditors.
Repayment Plan (DRBA Art. 611)
The repayment plan sets monthly payments equal to disposable income (monthly income minus subsistence expenses) for three years. The plan must observe the liquidation-value guarantee — no creditor receives less under the plan than in bankruptcy. Where the debtor's circumstances warrant, the period may be shorter, or longer (up to five years).
- Monthly disposable income calculation
- Repayment period — three years standard (post-2018 amendment)
- Liquidation-value guarantee narrative
- Schedule of distributions to each creditor
Plan Confirmation (DRBA Art. 614)
If the plan satisfies the statutory requirements, the court issues a confirmation order. No creditor vote is required; the court reviews the plan against the criteria under DRBA Article 614, including good faith and the liquidation-value test.
Performance and Discharge (DRBA Art. 624)
Monthly payments run for three years. Plan modification under DRBA Article 619 is available if circumstances materially change. On completion, the court issues a discharge order — the unpaid balance of dischargeable claims is extinguished. Non-dischargeable claims under DRBA Article 625 (intentional torts, certain support obligations, fraudulent debts) survive.
Disposable Income
How Monthly Repayments Are Calculated
Disposable income is the difference between average monthly income and recognized subsistence expenses. Subsistence expenses follow the National Basic Living Security Act standards, adjusted for household size.
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