Courts look to write off crypto debts to avoid personal bankruptcies

Core Viewpoint - South Korea is implementing new guidelines in rehabilitation hearings to alleviate the burden of crypto debts for individuals, aiming to prevent bankruptcies and manage the rising household debt crisis [1][2]. Group 1: New Rehabilitation Courts - Three new rehabilitation courts have been established in Daejeon, Daegu, and Gwangju to exclude debts from stock or cryptocurrency investments from liquidation calculations [1]. - These courts will work alongside the existing Seoul court and two additional branches opened in Suwon and Busan in 2023 [4]. Group 2: Debt Relief Measures - The new rules are part of South Korean authorities' efforts to control the country's household debt, which has reached a debt-to-GDP ratio of 92% in 2025, with a government commitment to cap household debt growth at 3.8% [2]. - The initiative follows public criticism after the government provided over $15 million in debt relief to individual crypto traders from a fund meant for small businesses [3]. Group 3: Impact on Bankruptcy Cases - The Seoul Rehabilitation Court has reported a nearly 13% increase in case load since 2023, handling around 28,000 cases last year, indicating a growing issue with bad crypto investments in bankruptcy cases [5]. - Courts are cautious of potential deceit from investors attempting to disguise crypto purchases as failed investments, with measures in place to punish such actions [6].