South Korea plans to exclude crypto investment debts from personal bankruptcy liquidation

SmartContractAuditor · 2026-03-10T00:31:38+00:00

The newly established Rehabilitation Courts in Daejeon, Daegu, and Gwangju, South Korea, exclude stocks and cryptocurrency debts from liquidation to reduce the burden on debtors and prevent personal bankruptcy. This move addresses household debt issues, and despite facing public criticism, the courts have pledged to strengthen audits.

SmartContractAuditor

2026-03-10 00:31:38

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Odaily Planet Daily reports that the three newly established Rehabilitation Courts in Daejeon, Daegu, and Gwangju, South Korea, will implement new guidelines. In personal debt restructuring hearings, debts incurred from stock or cryptocurrency investments will be excluded from liquidation calculations. This move aims to reduce the total amount debtors need to repay to creditors, prevent citizens from falling into personal bankruptcy, and address South Korea’s increasingly severe household debt problem (by 2025, household debt to GDP ratio has reached 92%).

Previously, Suwon and Busan courts classified such investment losses as “general property” losses rather than “speculative debt.” Although the policy has faced public criticism for potentially encouraging moral hazard, the courts stated they will conduct strict audits to prevent all attempts to conceal assets through disguised investment failures.

According to data from the Seoul Rehabilitation Court, the number of related cases has increased by nearly 13% since 2023. (DL News)

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