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BANKRUPTCY

Eliminating Debts in Korea By Filing Bankruptcy in the United States 08/14/2017

Kim is a US citizen. 17 years ago when he was denied a loan from a bank to finance his business in Korea, he asked Lee, one of his friends, to lend him $200,000. However, his business did not improve and Mr. Kim fled to the U.S. Lee sued him for fraud and time passed by. Kim’s attempts at running another business in the U.S. failed and eventually, he filed bankruptcy to eliminate all of his debts. When Kim arrived back in Korea to visit his sick mother, he was not too concerned about what had happened 17 years ago. Kim thought that the statute of limitations would be over by then, and moreover, he thought that any of his debts in Korea would have been discharged as well when he filed for bankruptcy in the U.S. However, Kim was arrested at the airport.

Firstly, Kim did not know that under the Penal Code of Korea, the statute of limitation is suspended and thereby extended if someone flees the country. Secondly, when he filed for bankruptcy in the U.S., Kim though that all of his debts in Korea were eliminated since they were listed in the petition. In reality, however, it is not such a simple matter.

Most decisions rendered by a U.S. court are also valid overseas. For example, if you have a divorce decision granted by a U.S. family court, your divorce will be valid if you submit the court’s decision to the Korean government and therefore you would not have to get divorced again in Korea. If two Koreans in the U.S. have a civil lawsuit against one another, such decisions will also be valid in Korea as well. In the case of bankruptcy, the Bankruptcy Code states that any debt that you owe regardless of whether the debt was incurred in the U.S. or in another country are eliminated through a bankruptcy filing.

Keep in mind that there are certain debts that are not eliminated by a bankruptcy filing in the U.S. Examples include debts incurred due to child support, alimony, government fines, and alcohol or driving injuries. In the case of student loans, there is a narrow exception whereby if you show extreme hardship, you may be able to have your student loans discharged or modified. If the debts owed overseas are included in the bankruptcy petition, such debts as well as any debts in the U.S. are both eliminated through the bankruptcy filing.
However, theory and practice can be very different sometimes and it is something that we, as attorneys, often see through the practice of law. One good example is when you have debts in Korea and you file bankruptcy. If a creditor in Korea claims that he or she had no knowledge of the bankruptcy filing and did not have a chance to object to the filing, the US court’s decision can come under scrutiny in Korea. As such, if you have debts in Korea and want to file bankruptcy in the U.S., it would be wise to consult a law firm that can handle such international components in both Korea and the U.S.

No matter how long you spent in the U.S., the longing for your hometown and family never disappears. If you are not able to visit Korea because of your debts in Korea, or you are suffering as a result of your debts in the U.S., you may want to consider filing bankruptcy. Bankruptcy is not a solution for all cases. However, it is an effective solution in many cases.

If you have any questions about filing bankruptcy, please contact us at mail@songlawfirm.com.