Institutional problems of personal bankruptcy
When a company goes bankrupt, it dissolves and disappears, 개인회생 장점 단점 but an individual must continue to live even if it goes bankrupt. Individual bankruptcy is an important system that provides opportunities for economic actors who have fallen behind in a capitalist market economy society and serves to restore them back to society. The personal bankruptcy and immunity system introduced in 1962 was practically privatized, but in 1997, the first case of immunity decision in Korea began to attract attention. In particular, after the International Monetary Fund (IMF) crisis and the credit card crisis in 2003, personal bankruptcy has established itself as a system that helps many people with bad credit return to society along with personal rehabilitation. From 2005 to last year, the number of applications for personal bankruptcy and personal rehabilitation has consistently exceeded 100,000 every year.
However, several laws still have regulations such as restrictions on employment and qualifications for those who are declared bankrupt, which are unreasonable and go against the original purpose of the personal bankruptcy system. The Debtor Rehabilitation Act stipulates that a person who has been declared bankrupt shall not be subjected to adverse treatment such as restriction of employment or dismissal (Article 32-2 of the Act). However, in reality, there are more than 200 laws and regulations that stipulate that bankruptcy is a reason for disqualification from work for public officials, lawyers, and solicitors. Although the declaration of bankruptcy was removed from the grounds for disqualification due to the revision of laws and regulations for doctors and nurses, many laws still have restrictions on employment. According to this, a person who has not been reinstated after being declared bankrupt cannot become an insurance solicitor, general security guard, child caretaker, apartment building representative, or owner of a traditional bullfight. After all, even if a bankrupt person can continue to work as a nurse, he cannot become a babysitter, and no one will understand why.
It is also necessary to re-examine whether the “strict review method” or the “completely appointed trustee in bankruptcy” for personal bankruptcy procedures by the courts is in line with the original purpose of the system. In fact, it is pointed out that the purpose of the system is to file for personal bankruptcy for low-income earners with little income exceeding the cost of living or for part-time earners who do not have regular income. In the United States, personal bankruptcy accounts for about 70% of personal bankruptcy cases, but in Korea, it is only 32% as of 2018. Although there are likely to be more cases of no regular income among those who file for personal bankruptcy, the fact that individual rehabilitation cases account for a greater proportion is a sign that there is a problem in the management of the system.
Korea’s household debt-to-GDP ratio reached 97.7% at the end of 2018, and the rate of increase in the household debt-to-GDP ratio over the past four years is the second highest in the world after China. When an economic crisis strikes again, a situation in which individuals in marginal situations are degenerated into bad credit may recur at any time. Although the personal bankruptcy system has grown tremendously in quantitative terms over the past 20 years, it is time to examine whether it is actually effective in supporting the recovery of individuals in crisis of bankruptcy.