It is absolutely difficult to commit fraud… ‘Debt collection technology’ to ensure you get the money you deserve

Many clients think of filing a fraud complaint as one of the solutions when they do not receive the money they lent. However, in order for fraud to be established, it must be clearly proven that the debtor did not have the intention or ability to fulfill the obligation from the beginning. It is difficult to be recognized as a fraud simply by not paying back the money, and there is a risk of being counter-indicted for making a false accusation.

In the same case, the first action you can take is to send a certificate of contents. This mainly contains the statement, "If the debt is not met within a certain period of time, legal action will be taken, so let's resolve it amicably before then." Certification of contents puts considerable psychological pressure on the other party, so there are many cases where the problem is resolved at this stage even if it does not go to trial.

Nevertheless, if the other party does not pay the debt, you must prepare for a lawsuit. The idea is to file a civil lawsuit, obtain a favorable ruling, and begin compulsory execution procedures. The most important step in this process is to accurately identify the debtor's enforceable assets. If assets are not identified or are unclear, you can check the details of assets such as real estate, deposits, security deposits, salaries, etc. by requesting property specification or property inquiry through the court. However, the possibility that the other party intentionally conceals the property or transfers it to a third party cannot be ruled out. In this case, safety measures must be put in place by applying for preservation measures such as provisional seizure and injunction in advance. So, is there a solution if the creditor has already stolen the property in the name of a third party?

In this case, a possible solution is a 'creditor cancellation lawsuit'. The creditor's previous actions can be invalidated and the relevant property returned to the debtor's name. In particular, Article 404 of the Civil Code guarantees the 'creditor's right of subrogation' so that creditors can exercise the debtor's rights on behalf of the debtor, and in some cases, this right can be a more effective and faster method of collecting claims than general compulsory execution.

Let me give an example of a case I actually handled. The client was a creditor who lent Company A about 1 billion won. The problem here was that Company A did not have property that could be executed. Company A had established Company B to acquire Company C and had handed over a large amount of funds. On the other hand, Company C owned golf course land worth 50 billion won on Jeju Island. Company C was ultimately acquired by Company A through Company B, but since Company C was a legally separate entity from Company A, it was not easy for the client to directly touch Company C's assets.

At this time, the author utilized the legal principle called ‘creditor’s right of subrogation’. If company A gave money to company B, and company B lent money to company C, the client, who is company A's creditor, is considered to be able to subrogate company A's creditor's right of subrogation, that is, 'company A's right to provisionally seize property owned by company C on behalf of company B, the debtor.' Although there was some trial and error as there was no precedent at the time, the court eventually made a decision to cite provisional seizure of Company C's golf course site, and the bond was recovered in full.

When it comes to collecting debts, legal procedures and securing evidence should be prioritized over simple emotional responses. It is important to remember that if you move outside the legal boundaries out of fear of not receiving money, you may face greater disadvantages in the future. Our Civil Act and Civil Procedure Act provide a variety of rights relief methods, but each system has different requirements and application methods, and there are also deadlines such as statutes of limitations and filing periods. Therefore, it is important to determine the appropriate means for each individual case and apply it in a timely manner, and it is most necessary to receive professional legal assistance at an early stage.
 

Small Business Team

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