CONTENTS
- 1. Lawsuit to Confirm Non-Existence of Debt | Definition
- - What Is an Action for Confirmation?
- 2. Lawsuit to Confirm Non-Existence of Debt | Common Types
- 3. Lawsuit to Confirm Non-Existence of Debt | Procedure
- 4. Lawsuit to Confirm Non-Existence of Debt | How to Respond
- - How the Debtor Can Respond
- - How the Creditor Can Respond
- 5. Lawsuit to Confirm Non-Existence of Debt | Cases
- 6. Lawsuit to Confirm Non-Existence of Debt | Points of Caution and Issues
1. Lawsuit to Confirm Non-Existence of Debt | Definition
A lawsuit to confirm the non-existence of debt is a suit brought when a creditor asserts performance of a debt even though no debt relationship exists, or asserts that a debt has not yet been settled.
In other words, when a person repeatedly receives demands for a debt that does not actually exist or faces the risk of a legal dispute, the debtor files a claim to confirm the non-existence of debt in order to preemptively block the legal risk and clarify their rights.
This suit constitutes an ‘action for confirmation’ that seeks confirmation of a legal relationship, namely, ‘whether a debt exists.’
What Is an Action for Confirmation?
An action for confirmation refers to a suit that seeks a determination of the existence or non-existence of a right or legal relationship.
▶Affirmative action for confirmation:
A suit such as one stating, ‘It is confirmed that the 100-pyeong parcel of land located at a given lot number belongs to the plaintiff.’
▶Negative action for confirmation:
A suit such as one stating, ‘Confirmation is sought that no debt exists arising from the loan for consumption of KRW 5 million dated October 10, 1995, between the plaintiff and the defendant.’
▶Interlocutory action for confirmation:
A suit seeking confirmation of a preliminary matter during the course of litigation, such as where, after B broke A’s camera and A brought a claim for damages, a dispute arose during the suit over whose camera it was, and a determination on that point is sought.
Representative actions for confirmation include the suit to confirm the non-existence of debt, the suit to confirm a leasehold, and the suit to confirm the nullity of a dismissal.
2. Lawsuit to Confirm Non-Existence of Debt | Common Types
Let us review the common types in which a lawsuit to confirm the non-existence of debt is brought.
-Where there was in fact no transaction, but a false claim is asserted
-Where the debtor has repaid all of a loan, a price of goods, or the like, but the creditor asserts that a balance remains
-Where the contract itself is void or has been rescinded, or a condition has not been fulfilled, so that no debt has arisen
-Where the debt has been extinguished, such as by completion of the extinctive prescription, but the creditor continues to make claims
In this way, when a person faces the risk of bearing legal liability even though no debt exists, the debtor may consider a lawsuit to confirm the non-existence of debt in order to resolve the legal uncertainty regarding that debt relationship.
3. Lawsuit to Confirm Non-Existence of Debt | Procedure
Let us review the procedure for a lawsuit to confirm the non-existence of debt.
1. Preparing and filing the complaint
The plaintiff (the debtor) files a complaint with the competent court seeking confirmation of the non-existence of debt.
At this stage, the following must be stated.
-The creditor’s information and the details of the opposing party’s asserted claim
-The grounds asserted for the non-existence of the debt
-Objective supporting evidence (the contract, proof of repayment, recorded calls, etc.)
2. The defendant’s submission of an answer
The defendant (the creditor) submits an answer asserting that the debt exists and attaches supporting evidence (the contract, performance-related materials, etc.).
3. Pleading and examination of evidence
Once both parties’ arguments are organized, the court hears both sides at the pleading date and, where necessary, determines whether the debt exists through the examination of evidence, such as an order to produce documents, examination of witnesses, and appraisal.
4. Pronouncement of judgment
The court reviews the facts and evidence as a whole. If it finds that the debt does not exist, it pronounces a judgment confirming the non-existence of the debt; conversely, if it determines that the debt exists, it dismisses the claim.
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4. Lawsuit to Confirm Non-Existence of Debt | How to Respond
Let us review how to respond in a lawsuit to confirm the non-existence of debt, from the perspectives of both the debtor and the creditor.
How the Debtor Can Respond
When a debtor receives a claim from a creditor for a debt that does not actually exist, the debtor should respond by following the procedure below.
1. Clearly ascertaining whether the debt exists
Through the contract, performance-related supporting materials, remittance records, and the like, the debtor should first organize whether the debt arose and, even if it did, whether it was repaid in full.
The debtor confirms whether the timing, circumstances, and grounds of the debt asserted by the opposing party are clear.
2. Securing supporting evidence
If repayment was made, it is necessary to secure objective materials such as a remittance confirmation, a receipt, and a tax invoice.
Because oral repayment, an implied set-off, or a waiver of a claim is difficult to prove, securing written evidence is important wherever possible.
3. Determining the need to resolve legal risk
If the creditor’s demands are repeated, or if compulsory execution is actually foreshadowed, the debtor should promptly consider filing a lawsuit to confirm the non-existence of debt.
Separately, if a suit for return of a loan or a compulsory execution procedure is underway, raising a defense of non-existence of debt within that procedure may be of practical benefit.
How the Creditor Can Respond
If a debtor has filed a suit seeking confirmation of the non-existence of debt, the creditor should respond as follows to protect their legal rights.
1. Securing the grounds for the claim and the performance records
It is important to secure materials that can prove the claim actually arose, such as the contract, the invoice, the delivery statement, and the construction completion confirmation.
If the opposing party has made partial repayment, the creditor should also present materials proving that a remaining debt exists.
2. Establishing a pleading strategy
The creditor responds comprehensively by also reviewing the possibility of additional claims arising, such as whether the maturity date has arrived and whether delay damages have accrued.
If the repayment asserted by the opposing party is not proven, a strategy of actively rebutting it is necessary.
3. Reviewing a counterclaim
In response to the debtor’s lawsuit to confirm the non-existence of debt, the creditor may also consider filing a counterclaim, such as a claim for return of a loan or a claim for the price of goods, to actively exercise the claim.
5. Lawsuit to Confirm Non-Existence of Debt | Cases
Let us review cases involving lawsuits to confirm the non-existence of debt.
CASE 1. Agency that filed a lawsuit to confirm non-existence of debt against popular singer E loses the case
-Whether an implied agreement existed regarding the method of settling advertising revenue was the key issue |
CASE 2. Aerospace company D partially prevails in a lawsuit to confirm non-existence of liquidated damages for delay against the defense procurement agency
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6. Lawsuit to Confirm Non-Existence of Debt | Points of Caution and Issues
A lawsuit to confirm the non-existence of debt involves the following issues and practical points of caution.
▶Reviewing whether an out-of-court resolution is available
To avoid unnecessary escalation of the dispute, it is advisable to first consider dispute mediation through certified mail, civil conciliation, and the like before filing suit.
▶Whether the interest in confirmation is recognized
If a claim to confirm the non-existence of debt is brought based merely on the opposing party’s conjecture or possibility, the court may find that there is no interest in confirmation and dismiss it, so a specific concern of a legal dispute must be proven.
▶The relationship with the extinctive prescription for claims
Because a legal right cannot be exercised once the extinctive prescription for a claim has passed, the limitations period must be confirmed.
▶Preparing for compulsory execution
If the creditor already holds a title for execution of the claim, it may be necessary to file an application for a stay of execution together with the lawsuit to confirm the non-existence of debt in order to block the execution.
In a lawsuit to confirm the non-existence of debt, organizing the facts and securing supporting evidence are central, and comprehensive legal review, including establishing a litigation strategy, securing evidence, and determining whether to file a counterclaim, is necessary.
Our firm has many attorneys experienced in handling lawsuits to confirm the non-existence of debt for various contracts.
From contracts between individuals to contracts between companies, the firm establishes tailored response strategies for each case and provides systematic support.
Please feel free to consult our firm, which can provide one-stop support from consultation through evidence collection to litigation.
To help address legal blind spots, our firm operates branch offices in regions nationwide and provides a 24-hour, 365-day consultation system and non-face-to-face video consultation services.
