Personal Rehabilitation in Korea: Complete Guide to Eligibility, Costs & Discharge

Personal rehabilitation (개인회생) is a court-supervised debt relief program in Korea that allows individuals with regular income to repay a portion of their debts over 3–5 years and have the remaining balance discharged. Unlike bankruptcy, you keep your assets and rebuild your financial life with a structured plan. This guide covers everything from eligibility to what happens after discharge.

What Is Personal Rehabilitation?

Personal rehabilitation is a legal procedure under Korea's Debtor Rehabilitation and Bankruptcy Act (채무자 회생 및 파산에 관한 법률). It provides a court-approved repayment plan where you pay what you can afford based on your income minus essential living expenses. After completing the plan (typically 3–5 years), remaining debts are legally discharged. It differs from personal bankruptcy (개인파산) in that you must have regular income and you repay a portion of your debts rather than having them fully discharged at once.

Eligibility Requirements

• Debt Limits: Unsecured debt must be under 1 billion won; secured debt (e.g., mortgage) must be under 1.5 billion won.
• Regular Income: You must have consistent income—salary, business income, pension, or other regular earnings. Irregular or no income disqualifies you (consider bankruptcy instead).
• Insolvency: You must be unable to pay debts as they come due. Simply having debt is not enough—you must demonstrate that your debt burden exceeds your repayment capacity.
• Good Faith: No history of fraudulent debt, gambling-related debt concealment, or prior rehabilitation discharge within the past 7 years.

Application Process

• Step 1 – Court Filing: Submit your petition to the district court with jurisdiction over your residence. Include a list of all creditors and debts, income proof, asset declarations, and a proposed repayment plan.
• Step 2 – Commencement Order (개시결정): The court reviews your petition and issues a commencement order, typically within 1–2 months. This halts all collection actions, wage garnishments, and lawsuits from creditors.
• Step 3 – Repayment Plan Approval (변제계획안 인가): The court evaluates your proposed repayment plan. The plan must repay at least as much as creditors would receive in bankruptcy (liquidation value). Approval typically takes 2–4 months after commencement.
• Step 4 – Repayment Period: Execute the approved plan for 3 years (wage earners) or 5 years (self-employed/business owners). Make monthly payments to a court-designated account.
• Step 5 – Discharge (면책): After completing all payments, the court grants a discharge order. Remaining unpaid debts are legally eliminated.

Costs

• Court Filing Fees: Stamp duty (인지대) approximately 30,000 won + service fees (송달료) approximately 100,000–200,000 won.
• Attorney/Legal Scrivener Fees: 1.5–3 million won for attorney representation; 800,000–1.5 million won for legal scrivener (법무사). Payment plans are often available.
• Other Costs: Document issuance fees (credit reports, residence certificates, etc.) approximately 50,000–100,000 won total.

How Monthly Repayment Is Calculated

Monthly repayment = (Monthly Income) − (Court-recognized Living Expenses). The court sets standard living expenses based on household size (referencing the Ministry of Health and Welfare's median income guidelines). For a single person in 2026, recognized monthly expenses are approximately 1.2–1.5 million won. Everything above that goes to creditors.

Life After Discharge

• Credit Recovery: Your credit score begins recovering immediately after discharge. Most people see significant improvement within 1–2 years.
• Credit Cards: You can apply for credit cards approximately 1–2 years after discharge, starting with low-limit secured cards.
• Loans: Small personal loans may be available 2–3 years after discharge. Mortgage eligibility typically returns after 3–5 years with stable income history.
• Credit Record: The rehabilitation record remains on your credit report for about 5 years after discharge but its impact diminishes over time.

Personal Rehabilitation vs Personal Bankruptcy

• Rehabilitation: Requires regular income, repay portion over 3–5 years, keep your assets, better for those with steady jobs.
• Bankruptcy: No income requirement, debts discharged after court review, may lose non-exempt assets, better for those with no income or minimal assets.
• Key Difference: Rehabilitation is a repayment plan; bankruptcy is liquidation. Choose rehabilitation if you have income and want to keep assets.