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Individual Rehabilitation: KRW 150 Million Recovered Through Asset Sei…
2026-09-08
The Bank Accounts and Crypto a Debtor Hid Behind a Personal Rehabilitation Filing,
A Success Story of Using Detention to Force Property Disclosure and a Household Property Auction
Hello, we are Kwon & Partners Law Firm, a reliable partner for clients who come to us frustrated because they cannot collect money owed to them. It is not uncommon for a creditor to hold a notarized deed and still be unable to collect payment. This is because once a debtor files for personal rehabilitation, a prohibition order and approval of the repayment plan quickly follow, and from that point on it can look as though there is nothing left the creditor can do.
Today we introduce a case in which Kwon Hyuk-sung, managing attorney of Kwon & Partners Law Firm, got collection moving again on a claim worth roughly KRW 150 million that had been stalled for nearly four years — by activating, one after another, every means allowed under the Civil Execution Act: seizing bank deposit claims and claims for the return of virtual assets, then a property disclosure order and detention, registration on the list of delinquent debtors, a property inquiry, and seizure of tangible movable property.
Between 2021 and 2022, our client lent a trusted acquaintance a total of more than KRW 150 million, taking three notarized deeds for a monetary loan agreement in return. Because the deeds included a clause consenting to compulsory execution, they were documents that allowed enforcement to begin without a lawsuit.
However, even after the repayment date passed, the other party repaid only part of the debt before cutting off contact, and in late 2023 filed for personal rehabilitation, obtaining a prohibition order and approval of a repayment plan. What followed was the deadlock creditors face most often: holding a title of execution while still being unable to collect the money.
| ✔ By layering seizure and pressure tools of different kinds at the same time, we got the collection of a claim that had been stalled for nearly four years moving again. |
1Using the Three Notarized Deeds as the Title of Execution — Correcting the Party's Name First
A title of execution under Article 56, Item 4 of the Civil Execution Act carries force only within the scope stated in the deed itself. The title of execution in this case consisted of three notarized deeds containing a clause consenting to compulsory execution, and we corrected the party's name to reflect the fact — discovered during the seizure process — that the debtor had legally changed their name. This step was necessary because an order with a mismatched name has no real effect even after it is served on the garnishee.
2Simultaneous Seizure Tying Together Banks and Exchanges
We targeted deposit claims at eight commercial banks and claims for the return of virtual assets at four virtual asset exchanges at the same time. Virtual assets are treated as "other property rights" under Article 251 of the Civil Execution Act, and what is actually seized is not the coins themselves but the claim for their return against the exchange. The Supreme Court's decision of May 15, 2025 (Case No. 2024Da310980) held that a future deposit claim can also be subject to seizure only if, at the time the seizure order is served, a legal relationship already exists as the basis for the claim to be seized and it can be expected, to a substantial degree, that a deposit claim will arise in the near future. If that underlying relationship is absent or the likelihood of one arising is insufficient, the seizure itself loses effect — so which account is targeted determines the outcome.
3Q. If the Other Party Files for Personal Rehabilitation, Must Collection Be Abandoned?
No. Article 600, Paragraph 1 of the Debtor Rehabilitation and Bankruptcy Act suspends and prohibits not only compulsory execution against property belonging to the individual rehabilitation estate, but also any act of receiving or demanding repayment of an individual rehabilitation claim (excluding acts in litigation), while the proviso to that paragraph limits this effect to claims listed on the creditor list. That means you must first check both what is recorded on the list and which item the action you intend to take falls under. Furthermore, Article 621, Paragraph 1, Item 2 of the same Act requires a decision to discontinue the case where it is clear the approved repayment plan cannot be carried out, but excludes as a proviso the case where the debtor has already received a discharge decision under Article 624, Paragraph 2. That is why, in practice, the key is to keep watching the progress of the rehabilitation case so as not to miss the moment the discontinuance decision becomes final.
4Turning a No-Show into Detention, Then Registration on the List
After our petition for a property disclosure order was granted, the debtor failed to appear at the first disclosure hearing, so we had the court refer the matter to a detention trial under Article 68, Paragraph 1 of the Civil Execution Act. Under the pressure of detention of up to 20 days, the debtor appeared at the second hearing, submitted a list of property, and took an oath. We then went on to obtain a decision registering the debtor on the list of delinquent debtors under Article 70 of the same Act, adding further leverage by restricting the debtor's access to credit.
What this case shows is that obtaining a title of execution is only the beginning, not the end. The outcome changes only when measures of different kinds are layered together — first tying up financial assets through bank deposits and virtual assets, then gaining information and applying pressure through a property disclosure order and detention, then squeezing credit and hidden assets through registration on the list and a property inquiry, and finally reaching into the debtor's living space through the seizure of movable property.
If the debtor has filed for rehabilitation or bankruptcy, you must keep monitoring the progress of that case. The moment the discontinuance decision becomes final is the opportunity to reopen execution, and because a third-party objection from a cohabiting family member commonly follows in the seizure of tangible movable property, materials supporting ownership should be secured at the seizure stage.
In handling this case, I often meet clients who believe collection is over the moment a debtor files for rehabilitation, even when they hold a title of execution. But by layering different procedures one by one — seizing bank deposits and virtual assets, obtaining a property disclosure order and detention, and registering the debtor on the list — even a claim that looks completely stalled can start moving again.
If you are owed money but feel stuck in the face of the legal process, please do not hesitate to consult directly with me, Kwon Hyuk-sung, managing attorney at Kwon & Partners Law Firm.
⚖️ Has a debtor's rehabilitation filing left you feeling stuck trying to collect what you're owed?
Kwon & Partners reviews the full range of procedures set out in the Civil Execution Act together — seizure of bank deposits and virtual assets, property disclosure and detention, registration on the list of delinquent debtors, property inquiries, and seizure of tangible movable property — to get your stalled claim moving again. If you have been giving up on collection because of a debtor's rehabilitation or bankruptcy filing, please feel free to contact us anytime.