In an effort to address rising personal bankruptcies among debt-ridden crypto investors, three new rehabilitation courts have opened in South Korea’s Daejeon, Daegu, and Gwangju. These courts will implement guidelines to exclude debts from stock and cryptocurrency investments from liquidation calculations, potentially easing the financial burden on those in debt. This initiative comes as the South Korean household debt-to-GDP ratio hit 92% in 2025, prompting the government to cap household debt growth. The move is part of a broader strategy to manage the country’s increasing personal insolvency cases, particularly those related to the volatile crypto market.
South Korea: South Korea is a technologically advanced East Asian nation grappling with elevated household debt levels linked to investment losses. Its government has introduced new judicial guidelines allowing courts to exclude cryptocurrency and stock investment debts from liquidation in personal rehabilitation proceedings to prevent widespread bankruptcies. This measure builds on prior efforts like debt relief for crypto traders despite public criticism.
Lee Seok-jun: Lee Seok-jun serves as a judge at the Seoul Bankruptcy Court handling insolvency cases. He advocated for enhanced government regulations to safeguard crypto investors as poor cryptocurrency investments increasingly complicate bankruptcy proceedings. His comments highlight ongoing judicial concerns over speculative losses in personal finance cases.
Busan Rehabilitation Court: The Busan Rehabilitation Court, launched in 2023, manages personal rehabilitation proceedings for over-indebted citizens. Like its counterparts, it reclassifies cryptocurrency investment losses as non-speculative to ease creditor repayments. It operates alongside expanding court networks addressing investment-related debts.
Daegu Rehabilitation Court: The Daegu Rehabilitation Court is a newly opened branch in South Korea dedicated to personal debt rehabilitation hearings. It will apply fresh guidelines to write off cryptocurrency debts in liquidation calculations, aiding debt-ridden investors. The court vows to penalize debtors attempting to conceal crypto holdings as failed investments.
Seoul Rehabilitation Court: The Seoul Rehabilitation Court, established in 2017, specializes in restructuring individual debts through rehabilitation plans that forgive excess obligations. It pioneered classifying crypto and stock losses as general property losses rather than speculative debts, reducing repayment burdens for debtors. The court has seen a surge in cases linked to investment failures.
Suwon Rehabilitation Court: The Suwon Rehabilitation Court, opened in 2023, focuses on individual insolvency rehabilitation programs. It has started treating crypto and stock market losses as general property losses to lighten debtor repayment obligations. This approach supports the national strategy to curb household debt escalation.
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“Debt Control”: “South Korean authorities aim to stabilize household debt through expanded rehabilitation courts excluding investment losses from key calculations.”,
“Judicial Expansion”: “New courts in Daejeon, Daegu, and Gwangju complement existing branches to handle rising personal insolvency cases tied to crypto.”
}
`
Source: dlnews
