Debts Past the Statute of Limitations: Bank Account Seizure and Interruption of Limitations

The saying that debts disappear on their own over time is only half true. The law does have a statute of limitations, but once a creditor takes action the period starts running again from the beginning, and one day a seizure of your bank account may arrive. We have summarized how the statute of limitations is structured, how it actually works, its relationship with rehabilitation and bankruptcy, and the risks you must know in practice.

This is also a question we often receive in debt consultations.

Once the statute of limitations has passed, don't I simply not have to pay?

Rights that disappear if you sleep on them

The Civil Act provides that if a right is not exercised for a certain period, it can no longer be used. This is the extinctive prescription, or statute of limitations. The purpose of the system can be seen in three ways.

• It prevents legal stability from being shaken by claims to rights that are too old.
• It stops creditors from exercising indefinitely rights they have neglected for a long time.
• It brings social disputes to a close.

In the end, the statute of limitations is a system that applies when a creditor has neglected a right without taking any action.

Limitation periods differ by type of claim

Bank loans are classified as commercial claims because banks are businesses operating for profit.

Not automatic extinction but an effect that must be asserted

The statute of limitations is not a system in which debt disappears on its own once the period passes. It takes effect only when the debtor directly asserts that the limitation period has been completed.

Even more important is the interruption of the limitation period. If the creditor takes legal action even once, the limitation period is interrupted and is counted again from the beginning. Typical events that stop the period are as follows.

• Filing a lawsuit
• Applying for a payment order
• Seizure
• Repaying part of the debt
• Acknowledging that the debt exists

A judgment extends the period to 10 years

This is a point that requires particular care in practice. Even for a short-term claim with a three-year limitation period, if the creditor files a lawsuit and obtains a judgment, the period is extended to 10 years.

The debtor believes it is over because three years have passed, but if the creditor obtained a judgment in the meantime through service by public notice, a bank account seizure may suddenly arrive. This is something we see quite often in practice.

Is a bank debt safe after five years?

In theory, the limitation period for commercial claims is five years. Reality is different, however.

• Banks do not simply let five years go by.
• They repeatedly interrupt the period with bank account seizures, provisional attachment of real estate and payment orders.
• Claims may also be transferred to collection companies and kept under management.

This is why the belief that a bank debt is over after five years is very dangerous.

The statute of limitations for taxes is trickier

Taxes follow different standards from ordinary claims.

On top of that, tax offices actively seize bank accounts, cars, real estate and even accounts receivable. Once a seizure is made, the limitation period effectively stops. You should also know that taxes are often not discharged even through bankruptcy.

What about time-barred debts in rehabilitation and bankruptcy?

When filing for rehabilitation or bankruptcy, many people wonder whether to include claims they believe are already time-barred in the list of creditors. The principle is clear: if in doubt, it is safer to include them.

A claim not entered in the list of creditors may not be covered by the effect of the discharge. There are also cases where people leave a claim out, trusting that the limitation period has run, only for collection to start again later.

Settle debts through a formal system rather than waiting

The statute of limitations certainly exists, but for the following reasons it is rarely applied in practice.

• Creditors almost always exercise their rights.
• A lawsuit extends the period to as long as 10 years.
• Even a partial repayment restarts the period.
• A seizure interrupts the period.

The hope that a debt will disappear if you wait rarely works. If you are already unable to repay, the realistic approach is to actively settle the debt through systems such as personal rehabilitation (gaein hoesaeng), personal bankruptcy or a debt workout. The statute of limitations is only a supplementary defense and can hardly be the main solution.

It is often said that the law does not protect those who sleep on their rights, but real creditors rarely fall asleep. Even for a time-barred debt, it is better to deal with it through a plan than to leave it to time.

---

Last reviewed: 2026-10-19 This article provides general legal information; specific advice is given through consultation.