Many foreigners, both companies and individuals, seek our advice on how they can effectively collect debts from debtors with assets, businesses and/or residences in Korea. The following article details the major means of collecting on a debt in Korea.
Collecting a Debt in South Korea from a Korean Debtor
- Hire an Experienced English-Speaking Korean Law Firm
It is crucial that you hire a Korean law firm with experience in collecting on debts for non-Korean or foreign-capital invested companies. Not all lawyers and law firms are capable of handling cases for non-Korean clients.
- File a Provisional Attachment
As mentioned in a previous article on provisional attachments in Korea, the purpose of a provisional attachment is to secure assets necessary for enforcement in cases where debtors may conceal or dispose of assets. In Korea, we may request the court to attach receivables, rental deposits, office equipment, automobile, bank accounts and any other real or personal property owned by the debtor. In most cases, security needs to be placed to the court in order to secure the attachment.
- Send a Demand Letter
A Demand Letter should be drafted in English and translated into Korean. A well-crafted Demand Letter, many times, shall suffice in successfully pressuring the debtor to pay for the debts if the debtor is reasonable, understands the risks of litigation, understands the debtor is in breach and is solvent.
- Obtain Payment Order
A Payment Order Complaint if accepted by the court is served on a debtor. The debtor has 14 days to answer the complaint. If the debtor does not submit an answer, the case is finalized and the court will issue a final judgment. And in the event that the debtor filed an answer within the required period, the court will order that the case be moved to a regular trial procedure.
- File a Civil Complaint for Collection
The creditor may also forego the filing of Payment Order Complaint and instead file directly a Civil Complaint for Collection of Debt.
- Register the Final Judgment and Get Execution Order
Whether the final judgment is from a Payment Order Complaint or from the Civil Complaint for Collection of Debt, the creditor through the assistance of his Korean lawyer should obtain an execution order from court. A thorough check of the assets of the debtor shall also be done by the law firm and manifest to court which of the assets shall be the subject of seizure in order to fully satisfy the amount provided in the final judgment. Within the Execution Suit, an asset scrub is possible and typical.
- File a Criminal Complaint
If the matter is perpetuated with an indicia of fraud by the debtor, it is advisable to immediately file a criminal complaint.
For similar articles, kindly read: Debt Collection Cases in Korea on the Rise: Buyers and Sellers Beware, Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor and Garnishing Wages in Korea: Collection of Debts in Korea.
And if you would like to discuss your matter with an attorney, please schedule a No-Charge Initial Consultation with a lawyer at: Schedule a Call with an Attorney in Korea.
- How Foreign Companies and Individuals can Collect Debts from Debtors in South Korea?
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- Collecting a Debt in Korea: Payment Orders are your Friends
- Does a Korean court have the power to issue a preliminary attachment on Korean assets stemming from a foreign court claim?
- Garnishing Wages in Korea: Collection of Debts in Korea
- Debt Collection Cases in Korea on the Rise: Buyers and Sellers Beware
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- Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor
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