Settling Multiple Debts in Japan

Troubles with Unpaid Credit Cards and Loans in Japan

If you bear too much debt and cannot pay your debt any more, you are advised to consult an attorney (“Bengoshi” in Japanese). In Japan, there are generally three methods to solve multiple debts with help of an attorney.

The attorney’s rules require a meeting with the client regarding debt settlement. Consider consulting with an attorney in your area.

1) Voluntary Liquidation (“Nin-i Seiri”)
2) Rehabilitation for Individuals (“Kojin Saisei”)
3) Bankruptcy (“Hasan”)

1) Voluntary Liquidation

The attorney negotiates with each creditor for installment payments. The period for installment payment is usually 3 to 5 years.

Initial Fee
Attorney fee (Initial Fee) for this procedure is usually 44,000 yen per creditor. (If there is only one creditor, the fee will be 66,000 yen.)

Success Fee
If an agreement on payment is reached through attorney negotiation, a success fee of 22,000 yen will be charged.

If the amount of the debt is reduced as a result of the attorney’s negotiations, an additional success fee of 11% of the reduced amount will be charged.

If the attorney’s negotiations result in the recovery of an overpayment, the additional success fee will be 22% of the amount recovered.

2) Rehabilitation procedure for Individuals

For cases of rehabilitation (Kojin-Saisei), attorney will file a petition to the court to reduce the amount of debt. Also the attorney will make an installment payment plan for 3 years (up to 5 years if there are special circumstances).

The advantage of this procedure is that you can solve your debt problem without losing the ownership of your house under the housing loan (mortgage).

There are several conditions to use this procedure. For example, your debt must be less than 50 million yen (excepting your housing loan), and you are required to have steady income.

Attorney fee for this procedure is usually around 330,000 yen to 660,000 yen. It may differ by the complexity of the actual case.

3) Bankruptcy

For bankruptcy cases, the attorney will file a petition to the court to release the debtor from payment of all the debt.

The debtor will be released from most debt, however, there are some demerits.
– You cannot keep your property which worth over 200,000 yen.
– There is a restriction on not being able to get a job in certain occupations.

If your asset is less than 200,000 yen and there are no problematic acts such as gambling, simple procedure called simultaneous abolition of bankruptcy (“Douji-Haishi” in Japanese) is used. In this case, you can file a petition for bankruptcy in the actual cost of around 20,000 yen in addition to the attorney fee.

In other cases (such as your asset being 200,000 yen or more), a bankruptcy trustee will be appointed by the court. In this case, you will need to prepare at least 200,000 yen as the expense for the bankruptcy trustee, in addition to the attorney fee.

Attorney fee for bankruptcy is around 220,000 yen to 660,000 yen. It may differ by the complexity of the actual case.

If you need legal help about debts (bankruptcy etc.), see an attorney (Bengoshi lawyer) for consultation. Attorney (Bengoshi) can support legal procedures about debts.
Contact the Attorney (Bengoshi)