When the Litigation Ends: Litigation Aftermath Part 1 - Overview

Many creditors proceed lawsuits against debtors, and whether being short or long, most creditors win in the end, as long as their credit is genuine.

Some debtors will voluntarily reimburse their debt after final judgment, on the contrary, the others do not pay even after the judgment becomes final and bound. Today I want to talk about those debtors who are not paying even after final judgment (hereinafter “bad debtors”).

Ordinary creditors seize the property of bad debtors, for example, bank accounts, lease deposits, bonds, claims for insurance, land, automobiles, etc. Yes, it is okay when creditor can recover its debt through seizure because you can also claim (part of) the fees for seizure to debtor when seizing their property.

Bad debtors, however, usually do not have enough property for reimbursement in most cases. All right, now we can consider three situations, (1) debtor has no money at all, (2) the debtor had disposed its property to 3rd party, (3) debtor still has enough property but creditor failed to find it so far.

Firstly, when debtor has no money at all, it is difficult to seek for prompt return of money. However, in the event when debtor had intention of fraud or embezzlement, charging the debtor to police / public prosecutor can be a effective way to press debtor or his/her family to make repayment.

Secondly, when debtor has disposed its property to third party, creditor can consider “revocation and restitution claim” according to Civil Act Art. 404. Despite of its difficulty, when successful, creditor can revoke creditor’s disposal of property and recover its credit.

Thirdly, when debtor has enough property but creditor has not found it. Korean Civil Execution Act provides (1) Specification of Property (Art. 64), (2) Inquiry about Property (Art. 75), (3) Entry in Defaulter’s List (Art. 70) to help creditors find debtor’s property for compulsory execution. Above remedies can help creditors to find debtor’s assets, however, these remedies take considerable time to receive its results and most bad debtors can take several preliminary actions to avoid repayment and penalties.

In this post, I have briefly reviewed the overall process and remedies of reimbursement when a lawsuit is finalized. From the next post, I will review and introduce each of above procedures in detail.