How Companies and Individuals Can Collect an Unpaid Debt in South Korea

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. For an article on enforcing a foreign judgment in a Korean court, see: How to Enforce a Foreign Judgment in a Korean Court? For an article on the securitization of movable properties in Korea, please see: Security on Movable Property and Receivables in Korea

How to Collect on an Unpaid Korean Debt under Korean Law

Collecting a Debt in South Korea from a Debtor in Korea

1. Hire an Experienced English-Speaking Korean Law Firm
   It is crucial that you hire a Korean law firm with experience in collecting debts for non-Korean or foreign-capital invested companies. Not all lawyers and law firms in Korea are capable of handling cases for non-Korean clients, and not all law firms in Korea are proactive and street smart, and for collecting debts in Korea these are two essential qualities.
2. 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 Korean court to attach receivables, rental deposits, office equipment, automobiles, bank accounts, and any other real or personal property owned by the debtor. In most cases, security needs to be placed with the Korean court in order to secure the attachment.
3. 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.
4. Obtain Payment Order
   A Payment Order Complaint, in Korea, if accepted by the Korean court and is served on a debtor, becomes a valid and enforceable judgment if the debtor does not answer the Payment Order within 14 days. If the debtor does not submit an answer, the case is finalized, and the Korean court will issue a final judgment. And in the event that the debtor filed an answer within the required period, the court in Korea will order that the case be moved to a regular trial procedure.
5. File a Civil Complaint for Collection
   The creditor may also forego the filing of a Payment Order Complaint and instead file directly a Civil Complaint for Collection of Debt.
6. 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 the 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.
7. 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.

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law for our litigation services.

If you would like a consultation with an English-speaking lawyer in Korea, please schedule a call at: Schedule a Call with an Attorney.