Loan Recovery Litigation Lawyer
Loan Recovery Litigation Lawyer | From Proving the Loan to Actually Collecting
A loan recovery lawsuit is a civil action to recover money that was lent under a loan agreement (consumer loan) and not repaid on the agreed date (민법 제598조). The outcome usually turns less on the law itself and more on whether you can prove a loan actually existed and how much is still outstanding. Because obtaining a favorable judgment does not automatically move money into your account, asset tracing and preservation measures taken before or during the suit are often just as important as the lawsuit itself.
Loan Recovery Litigation | Three Ways to Pursue an Unpaid Loan
Not every unpaid loan needs a full trial. Which procedure fits depends on how strong your documentary evidence is and whether the debtor is likely to dispute the debt at all.
| Speed | Fast if uncontested (weeks) |
| Court hearing | None, unless objection filed |
| Debtor objection | Converts automatically to a lawsuit |
| Best for | Clear written IOU, no dispute expected |
A payment order (지급명령) under 민사소송법 제462조 lets a creditor obtain an enforceable title without a hearing, but if the debtor files an objection within two weeks, the case simply becomes an ordinary civil suit.
| Speed | Several months to over a year |
| Court hearing | Yes, evidence examined |
| Debtor objection | Contested throughout via briefs |
| Best for | Disputed facts, weak or partial documentation |
A formal lawsuit for return of a loan (대여금반환청구의 소) allows both sides to submit evidence and testimony, and the court weighs the whole record before ruling, which is necessary once the debtor denies borrowing the money or claims it was already repaid.
| Speed | Faster than ordinary suit |
| Court hearing | Simplified, often single session |
| Debtor objection | Still possible, but streamlined |
| Best for | Claims within the small claims threshold |
Small claims procedure (소액사건심판법) applies to money claims under a set amount and allows a simplified, faster hearing process, though the debtor can still contest the claim.
Loan Recovery Litigation | What You Actually Need to Prove
Korean courts do not presume that a transfer of money was a loan. The person suing has the burden of proving both that a loan agreement existed and that repayment has not been made.
A loan is a contract, not just a bank transfer
Under 민법 제598조, a loan (소비대차) is formed when one party agrees to transfer money and the other agrees to repay an equivalent amount later. A bank transfer record alone shows money moved, but not why it moved — it could be a gift, an investment, or repayment of an unrelated debt. Courts look for surrounding evidence such as text messages, KakaoTalk chats, or a promissory note that shows both sides understood the money had to be repaid.
Written IOUs and loan certificates carry the most weight
A signed loan certificate (차용증) or promissory note stating the amount, repayment date, and interest rate is the strongest evidence, and if notarized it can sometimes serve as an enforceable title on its own for certain claims. Even an informal handwritten note or a message where the debtor acknowledges owing money can help meet the burden of proof when no formal document exists.
Interest and the statute of limitations
A general civil claim for return of a loan is subject to a 10-year limitation period, but claims arising from commercial transactions between merchants are limited to 5 years (상법 제64조), and interest claims can be subject to a shorter 3-year period under certain circumstances (민법 제163조). Reviewing when the debt became due, and any partial repayments or written acknowledgments that may have reset the clock, is an early step in any case.
Loan Recovery Litigation | How Debtors Typically Fight Back
Anticipating the debtor's likely defense before filing shapes what evidence you gather and which procedure you choose.
"It was a gift, not a loan"
This is the most common defense when there is no written agreement. The debtor argues the transfer was a gift (증여) with no obligation to repay, shifting the dispute to whichever party can show more context — conversation records, the relationship between the parties, and whether repayment was ever discussed.
"I already repaid it"
The debtor bears the burden of proving repayment once the loan itself is established. Cash repayments without a receipt are hard to prove for either side, so bank transfer records showing repayment, or the absence of them, often become the deciding factor.
"The claim is already time-barred"
If the limitation period has run and the debtor raises it as a defense (소멸시효 항변), the claim can be dismissed regardless of whether the loan actually happened. Checking whether any acknowledgment of debt, partial payment, or prior legal demand has interrupted or reset the limitation period is essential before relying on an old IOU.
Loan Recovery Litigation | Winning the Case vs. Actually Collecting
A civil judgment only confirms what is owed; it does not move money on its own. If the debtor has no traceable assets by the time the judgment is final, the win can become largely symbolic.
Provisional attachment before or during the suit
A provisional attachment (가압류) under 민사집행법 freezes a debtor's identifiable assets, such as real estate, bank accounts, or salary, before the lawsuit concludes. Filing this early, sometimes even before the main suit, can prevent a debtor from disposing of assets while the case is pending.
Enforcement after judgment
Once a judgment or payment order becomes final, it works as an enforceable title (집행권원) allowing compulsory execution against the debtor's property. If the debtor's assets are unclear, a court-ordered property disclosure procedure (재산조회) or a request for the debtor to submit a list of assets can help locate something to attach.
Loan Recovery Litigation | From Initial Review to Enforcement
We review whatever documentation exists — transfer records, messages, any IOU — and typically send a formal demand letter (내용증명) to create a documented record before filing.
Based on how likely the debtor is to dispute the claim and the strength of the evidence, we file a payment order, small claims action, or a full civil suit for return of the loan.
If there is a risk the debtor will hide or dispose of assets, we file for provisional attachment on real estate, bank accounts, or wages before or alongside the main case.
If the debtor objects or disputes the claim, the case proceeds through written briefs, document submissions, and hearings where the court examines whether the loan and non-repayment are proven.
Once a final and enforceable judgment or payment order is obtained, we pursue compulsory execution against identified assets, using property disclosure procedures if the debtor's assets are not yet known.
Loan Recovery Litigation | How Fees Are Calculated
Generally set with reference to the amount of the claim, since court filing fees and the complexity of evidence review scale with the size of the loan being pursued.
Often structured as a percentage of the amount actually recovered, which aligns the fee with real collection rather than just obtaining a judgment on paper.
Includes court filing fees calculated based on the claim amount, service of process costs, and fees for provisional attachment if that step is necessary.
If compulsory execution or property disclosure procedures are needed after judgment, additional costs arise separately from the litigation fee itself, since this is a distinct post-judgment procedure.
※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.
Loan Recovery Litigation | Self-Check Before You File
1️⃣ Do You Have Enough to Prove a Loan?
- Do you have a written loan certificate (차용증) or promissory note?
- Do you have bank transfer records showing the money you sent?
- Do you have messages where the other person acknowledges the debt?
- Is there a clear agreed repayment date, even if informal?
2️⃣ Is Time Running Out?
- Has more than 10 years passed since the loan became due?
- Was this a transaction between businesses, which may carry a 5-year limit?
- Has the debtor made any partial payment or written acknowledgment recently?
- Have you sent any formal demand letter that might interrupt the limitation period?
3️⃣ Can the Debtor Actually Pay?
- Do you know if the debtor owns real estate, a car, or a bank account?
- Is there a risk the debtor will sell or hide assets soon?
- Would a provisional attachment be worth filing before the main suit?
- Do you need a property disclosure procedure after judgment?
