Understanding Interest Rates on Unpaid Debts in Korea: Legal Implications and Procedures
In the realm of debt collection in Korea, understanding the complexities of interest rates on unpaid debts is crucial for ensuring a fair resolution. Here’s what you need to know when pursuing legal action against a debtor:
1. Statement of Complaint
When submitting a complaint to a civil court in Korea due to non-payment of debt, your statement of complaint should include details concerning interests.
2. Agreed Interest Rate
If an interest rate was agreed upon between the parties involved, this agreed-upon interest rate shall apply.
3. Statutory Interest Rates for Civil Debts
In the absence of an agreed-upon interest rate, if your debt concerns civil bonds/debts, statutory interest of 5% on civil debts applies.
4. Statutory Interest Rates for Commercial Debts
Statutory Interest Rates for Commercial Debts: Similarly, in the absence of an agreed-upon interest rate and if your debt concerns commercial bonds/debts, a statutory interest rate of 6% applies. One example where statutory interest rates for commercial debts apply is when both you and the debtor are merchants as described in the Commercial Act of Korea.
5. Special Statutory Rate After Complaint
Once the complaint is served, a special statutory interest rate of 12% by the Act on Special Cases concerning Expedition, etc. of Legal Proceedings applies until the debt is paid in full.
6. Sample Clause
For instance, a statement may include, "Defendant shall pay Plaintiff 1,000,000 KRW and interest thereon at the rate of 5% per annum from January 1, 2024, until the date of service of the complaint and 12% per annum from the day after the date of service of the complaint until paid in full."
7. Purpose of Special Statutory Interest Rate
The special statutory interest rate of 12% aims to expedite civil litigation and encourage debtors to pay promptly.
Incorporating the most recent legal updates, our article explores the intricate landscape of debt recovery in Korea. From submitting complaints to civil courts to understanding the complexities of interest rates, we guide you through each step of the process. Learn how to navigate the nuances of statutory interest rates, including the specialized rates set forth by the Act on Special Cases concerning Expedition, etc. of Legal Proceedings, which currently stands at 12% as of April 19th, 2024. At Virtual Lawyer Korea, we ensure you have the latest, accurate information to help you navigate your legal journey with confidence.
Virtual Lawyer Korea is committed to assisting you throughout the debt collection process. Whether you need guidance on legal procedures or representation in court, our team is here to provide expert assistance. Don’t let unpaid debts become a burden – let us help you achieve a fair resolution.
