The Bank Debt Was Listed, but the Guarantor Was Left Out: A Case Analysis Distinguishing an Old Guarantee from Knowledge at the Time of Discharge
A case analysis of an actual case, based on publicly available judgments. The first-instance, appellate and Supreme Court judgments, together with the 2026 Supreme Court decision used for comparison, were examined directly. The original litigation record, such as the loan agreement, the letter of guarantee and the application for discharge, was not examined, and neither was the outcome after remand. The opposing readings and hypothetical evidence below are the author's analysis, not additional facts of the actual case. Article 566, shown as in force from October 2, 2026, was checked separately, but this is not an individual legal opinion based on a full survey of subsequent legislation and case law.
Supreme Court Judgment 2023Da266031 rendered on December 12, 2024. This analysis separates the 1998 loan, the 2009 application for discharge and the guarantor's 2021 payment. It then traces why the three instances read the same omission differently, and where the burden of proof lay.
One Missing Name, Several Different Questions
The debtor entered the bank loan in the list of creditors. The debtor did not, however, enter the future indemnity obligation owed to the person who had guaranteed that loan. Long after the discharge became final, the guarantor paid the bank and claimed reimbursement from the debtor. The debtor countered that the debt had been discharged. Confirming only that the name was absent from the list covers less than half of the case.
Three questions are connected, but they are not the same question: whether the omitted right arose from a pre-bankruptcy transaction, whether the debtor knew of that right before the discharge, and whether the guarantor lost the opportunity to participate in the proceedings. In particular, it must be examined whether evidence that the debtor knew of the guarantee when taking out the loan is also evidence that the debtor was aware of the indemnity obligation more than ten years later.
This analysis does not assess who appears more conscientious. It examines, in Supreme Court case 2023Da266031, the point in time of the material from which knowledge was inferred, and who bore the burden of proving that inference. The conclusion is not permission to prepare the list carelessly. It concerns what reasoning is needed to move from the fact of omission to the requirements for non-dischargeability.
Sources for this section: Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
The Bank, the Debtor and the Guarantor: Different Rights Attached to the Same Money
The plaintiff in the lawsuit is not the bank but the guarantor. The defendant is the debtor who borrowed from the bank. If the bank's right to be paid and the guarantor's right to seek reimbursement from the debtor after paying on the debtor's behalf are merged into one, the object of the omission is misread from the outset.
The Supreme Court judgment distinguishes the KRW 100 million loan, the guarantee limit of KRW 72 million, and the subrogated payment actually made of KRW 60 million. The three figures are not three expressions of the same fact.
| Party or amount | Position in the published judgment | Error caused by confusion |
|---|---|---|
| The bank | Creditor under the 1998 loan. Entered in the list submitted by the debtor. | The fact that the bank is on the list is turned into a finding that the guarantor was also listed. |
| The plaintiff, the guarantor | Gave a limited revolving guarantee, paid KRW 60 million on the debtor's behalf in 2021, and then claimed reimbursement. | Looking only at the date of the subrogated payment, one reads every legal relationship as having arisen anew at that time. |
| The defendant, the debtor | Applied for bankruptcy and discharge in 2009. Listed the bank debt but omitted the future indemnity obligation owed to the guarantor. | The incompleteness of the list and the question of the debtor's knowledge at the time are treated as a single fact. |
| KRW 100 million / KRW 72 million / KRW 60 million | Loan amount / guarantee limit / subrogated payment actually made. | Mixing the original debt, the limit of liability and the amount actually paid distorts the scale of the case and the scope of the claim. |
Sources for this section: Busan District Court, Eastern Branch, Judgment 2022GaDan100624 Decided July 12, 2022 — first-instance judgment in the same case · Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case · Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
The Time Gaps to Examine Before the Payment Date
This case contains two long gaps. The first runs from the guarantee agreement to the application for discharge. The second runs from the discharge becoming final to the guarantor's subrogated payment. The first gap is where one examines whether the debtor's knowledge persisted. The second marks the fact that actual payment was made after the discharge. Neither can serve as the answer to the other.
| Date | Event confirmed | What that date alone cannot answer |
|---|---|---|
| May 22, 1998 | Loan of KRW 100 million from the bank. The plaintiff's limited revolving guarantee, with a limit of KRW 72 million. | Whether involvement at the time of the loan means awareness of the indemnity obligation a long time later. |
| October 13, 2009 | Application for bankruptcy and discharge. The bank debt was listed; the guarantor's future indemnity obligation was omitted. | Whether the omission resulted from not knowing of the obligation, or from leaving out the entry while knowing of it. |
| November 17, 2010 / December 2, 2010 | Declaration of bankruptcy, discontinuance of bankruptcy and discharge decision, followed by the discharge decision becoming final. | Whether the effect of the discharge extends to each individual omitted claim. |
| December 22, 2021 | The guarantor made a subrogated payment of KRW 60 million to the bank. | Whether this payment alone can retroactively establish the debtor's knowledge in 2009–2010. |
| July 20, 2023 | Appellate judgment rendered by the Busan District Court in 2022Na58575. | On what grounds the court below based its decision. |
| December 12, 2024 | The Supreme Court reversed the appellate judgment and remanded the case to the Busan District Court. | The final outcome after remand and any material examined further. Not confirmed in this analysis. |
Sources for this section: Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement · Busan District Court, Eastern Branch, Judgment 2022GaDan100624 Decided July 12, 2022 — first-instance judgment in the same case · Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case
What Did Each of the Three Courts Place at the Centre?
The content of the first-instance judgment is not included in the official texts on which this analysis relies. What the first-instance court placed at the centre, and what conclusion it reached, therefore cannot be stated on the basis of the material examined here.
The appellate court found that the defendant, although aware of the existence of the future reimbursement obligation owed to the plaintiff, had negligently failed to enter it in the list of creditors, and held that the reimbursement claim was a non-dischargeable claim. The Supreme Court judgment reports the lower court's reasoning only as being "for the reasons stated therein." It points out that a firm conclusion is difficult to draw solely from the facts that the parties visited the bank together and personally prepared the documents, and that the loan and the guaranteed amount were large. The appellate court's approach was that even a formal error in the entry renders a claim non-dischargeable if it rests on knowledge of the debt.
The Supreme Court did not abandon the purpose of protecting creditors. It set alongside that purpose the fresh-start objective of the discharge system and the disadvantage that arises when an omitted debt survives. It then took issue with the part of the reasoning that inferred knowledge at the time of discharge solely from past involvement in the transaction. The core of the reversal is the finding that, in light of the record, knowledge at that point in time is difficult to establish.
It is therefore wrong to write that the Supreme Court endorsed every explanation given by the first-instance court. The first-instance court's reasoning on the structure of participation and the Supreme Court's reasoning on time, knowledge and the burden of proof are not identical, even if their conclusions point in a similar direction. The published operative part of the Supreme Court judgment is a reversal and remand. This analysis is not a report that has confirmed how the claim was finally dealt with after remand.
Sources for this section: Busan District Court, Eastern Branch, Judgment 2022GaDan100624 Decided July 12, 2022 — first-instance judgment in the same case · Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case · Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
The Word "Negligence" Alone Does Not Reveal Which Situation Applies
The bad faith (akui) that the judgment interprets is not the same as ill will in everyday language. The key question is whether the debtor knew of the debt and nevertheless left it off the list. This does not mean that a separate plan to harm the other party must be found. Nor does it mean that any degree of carelessness at once makes the claim non-dischargeable.
The Supreme Court separates two cases: where the debtor was negligent in not knowing, and where the debtor knew but did not enter the debt. In the first case, the mere assessment that the debtor could have known by exercising due care does not make the claim non-dischargeable under this provision. In the second case, the claim may be non-dischargeable even if the omission of the entry was itself negligent. A party's statement that "it was a mistake" acquires meaning only once it is broken down to determine which of the two facts it asserts.
The relevant point in time must also be distinguished. The general legal principle in the judgment refers to knowledge before the discharge decision, while the specific determination in this case focused on the circumstances at the time of the application for discharge. This is therefore not read as permission to examine only the moment the application was prepared and to exclude from the analysis any material showing that the debtor newly confirmed the debt after the application but before the decision.
| State to be examined | Further question required | Leap of reasoning to guard against in light of this judgment |
|---|---|---|
| An explanation that the debtor was not aware of the debt itself | Does the explanation say the debtor did not actually know the relevant facts, or only did not know their legal label? | Neither treat the discharge as settled merely on the claim of not knowing, nor find actual knowledge merely because the debtor could have known. |
| An explanation that the debtor knew of the debt but it was left off the list | At what point before the discharge, and through what material, is that knowledge established? | Do not treat an explanation that the debt was not deliberately concealed as, by itself, excluding the application of subparagraph 7 of Article 566. |
| The fact that the debtor knew of the guarantee when the loan was taken out | Was there contact, demand or a relationship linking memory and awareness up to the time of the discharge proceedings? | Do not copy past knowledge unchanged onto a later point in time. |
Sources for this section: Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
Why Signatures and Amounts Were Not a Sufficient Answer
The fact that the parties visited the bank together and personally prepared the loan agreement and the letter of guarantee carries real weight. It can support the inference that the debtor knew, at the time, of the guarantor's existence and the structure of the transaction. The large size of the loan and the guarantee also supports the appellate court's reading that the transaction was a memorable one. Dismissing this material as meaningless would mean failing to examine the other side's argument properly.
The problem lies in the time this evidence describes. The Supreme Court also examined whether there were circumstances that carried the debtor's knowledge forward to the application for discharge more than ten years later. The guarantor had not paid before the discharge. There was also no material showing a demand that would have brought the reimbursement relationship to the debtor's attention, or a personal relationship close enough to keep reminding the debtor of it. A gap needed to be bridged between the experience of borrowing a large sum and a state of awareness, at the time of discharge, of a future obligation to a particular guarantor.
Here, the statement that "there is no material" differs from an established fact that the two people never once contacted each other. It should be read as meaning that no such material could be found within the scope of the record examined in the published judgment. The author did not directly investigate telephone records or the personal relationship, and therefore adds nothing about why contact ceased or how the memory faded.
The passage of a long period is not an independent condition for discharge either. Had there been repeated demands or acknowledgements by the debtor during the same period, the assessment of knowledge could differ. This case does not lay down a numerical rule under which a debt is treated as forgotten once a certain number of years has passed.
Sources for this section: Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case · Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
What Does Listing the Bank Prove?
The fact that the bank debt was entered in the list can be used differently by each side. The guarantor can argue that, since the debtor remembered the underlying loan, the debtor must also have known of the guarantee relationship. The debtor can explain that the loan itself was not concealed, and that no particular reason has emerged for leaving out only the guarantor. This is a reading constructed by the author to compare the issues. There is no record that either party advanced these arguments in these terms.
In addition to the fact that the bank claim was listed, the Supreme Court took into account that there was no material in this case pointing to grounds for refusing discharge, and that no reason was apparent for omitting the future reimbursement claim while being aware of it. The absence of a clear motive for the omission was one of the circumstances used to assess knowledge. Turning it into a new requirement that "without a benefit there is no bad faith" would be inconsistent with the meaning of bad faith identified above.
Nor can it be drawn directly from this judgment that listing the bank legally substitutes for listing the guarantor. The Supreme Court examined the debtor's knowledge on the premise that the guarantor's future indemnity obligation had been omitted. An explanation that there was an omission, but insufficient proof of the knowledge needed to find non-dischargeability, is closer to the structure of the judgment than an explanation that erases the object of the omission.
Sources for this section: Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
The Disadvantage to a Creditor Who Lost an Opportunity, and the Burden of Proof
The strongest point the guarantor can raise is that, having been left off the list, the guarantor lost the opportunity to choose how to respond in the proceedings. The appellate court considered that, had the guarantor been listed and served, the guarantor would have had the opportunity to decide whether to pay and exercise the right. This reasoning shows the value of participation in the proceedings. The specific legal questions concerning the scope of participation of a holder of a future right of reimbursement, and the conditions of payment, must be examined separately. This analysis does not explain every situation under Article 430.
The consequence of losing the opportunity to participate does not, however, automatically prove the debtor's knowledge. According to the Supreme Court, the burden of proof lies with the creditor who asserts that the claim is non-dischargeable. If knowledge, the opposite fact, were treated as proven merely because the debtor failed to establish exactly how the debt came to be forgotten, the allocation of the risk of what remains unproven would be reversed.
This does not mean that the debtor need offer no explanation at all. Whether the explanation of how the omission occurred is consistent with the objective material is a factor identified by the Supreme Court. However, the awkwardness of an explanation, the possibility of awareness, and material that supports a finding of actual knowledge must be assessed separately. That is why the question of which explanation is more natural is considered together with the question of who bears the burden of proof.
Sources for this section: Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case · Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
Applying Two Hypotheses to the Same Material
The following comparison is not a profile reconstructing the parties' state of mind. It is an analytical table testing what role the circumstances identified in the published judgment play under different explanations. To avoid fitting the same material to only one interpretation, both the favourable reading and its remaining limits are set out.
| Material or circumstance | Explanation that knowledge persisted | Explanation that knowledge at the time of discharge is difficult to establish |
|---|---|---|
| Visit to the bank and personal preparation of the documents | Grounds for finding that the debtor knew of the guarantor at the time of the transaction. | Given the time gap before the application for discharge, knowledge at that time cannot by itself establish later knowledge. |
| Large loan and guarantee | Supports the inference that, as an important transaction, it would not easily have been forgotten. | The size of the amount does not directly show the actual state of memory and must be assessed together with the passage of time and subsequent relations. |
| Listing of the bank debt | Can be read as material showing that the debtor remembered the underlying loan. | Can also be read as showing that the loan was not concealed and that no separate reason for omitting the guarantor has emerged. |
| Absence of material on demands or a continuing relationship before the discharge | It means only that such material was not obtained, not that the absence of actual knowledge has been established. | It indicates that evidence linking the past transaction to the time of discharge is weak. |
| Subrogated payment in 2021 | Shows how the reimbursement claim actually arose. | A payment made later does not, by itself, prove earlier knowledge. |
Sources for this section: Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement · Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case
If Evidence Is Added, What Must Be Reassessed First?
The following situations are not facts established in the actual case. They are hypotheticals that test, from the opposite direction, the links the judgment treated as important. They do not set a rule that a single piece of evidence necessarily changes the conclusion. They show which issues would be reopened.
| Hypothetical additional material | Issue that becomes stronger | What that material alone does not resolve |
|---|---|---|
| A message, sent shortly before the application for discharge, in which the debtor acknowledged to the guarantor the existence of the future indemnity obligation | It becomes more likely to directly support knowledge at the time of discharge. | Authenticity, authorship, the debt concerned, context and date must be verified. Other requirements for non-dischargeability and exceptions are not automatically resolved. |
| A notice of the guaranteed balance held in the bank's records, where it is unclear whether it reached the debtor | It may serve as material establishing the content of the debt and its existence at the time. | The fact that a document was created cannot be converted directly into the debtor's receipt, reading or awareness of it. |
| A payment by the guarantor made before the discharge, together with the debtor's promise to repay | The explanation that the debtor was aware of a concrete indemnity obligation, beyond an abstract future relationship, becomes stronger. | Whether the promise concerned the debt in this case, and whether there were later circumstances of modification or extinction, are separate questions. |
| Service or receipt records showing that the guarantor knew of the declaration of bankruptcy | Beyond the debtor's knowledge, the proviso to subparagraph 7 of Article 566 must be examined. | Who received which notice and when, and the scope of application in this case, must be re-examined. |
Sources for this section: Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement · Article 566 of the Debtor Rehabilitation and Bankruptcy Act — version shown as in force from March 1, 2026
A Question Raised Again in a 2026 Decision: Is Receiving a Judgment the Same as Knowing of It?
The material for comparison is Supreme Court Decision 2025Ma7576 dated January 9, 2026. In that different case, a creditor applied to have the debtor entered in the register of defaulters on the basis of a judgment for a loan. The debtor had already been granted a discharge but had not entered the judgment debt in the list. The court below considered that the explanation for the omission was hard to accept and that material supporting good faith was insufficient.
The Supreme Court cited the determination on knowledge and the burden of proof in 2023Da266031. It examined circumstances such as the indication that the debtor had not personally received the litigation documents, the service of the judgment by publication, the long interval before the application for discharge, and the difficulty of finding material on demands or collection efforts in the meantime. It concluded that there was considerable room for the effect of the discharge to extend to the debt. It reversed the decision below and remanded the case, reasoning that if the effect of the discharge extends to the debt, the application for entry in the register also lacks justifiable grounds.
This comparison must not be used to derive a general proposition that service by publication is invalid. The submission of a statement correcting the address and service on an employee also appear in the decision. The key is to distinguish the fact that the procedure was legally carried out from the extent to which the debtor actually became aware of its content. Nor is it a decision holding that the single circumstance of not personally receiving documents negates knowledge of every debt.
What the two cases have in common is the point in time at which knowledge is assessed and the burden of proof. They differ in the structure of the proceedings and of the rights involved. One concerns a guarantor's future indemnity obligation and a claim for its payment. The other concerns entry in the register based on an existing judgment for a loan. Confirming a common legal principle does not allow the conclusion of one case to be substituted for that of the other.
Sources for this section: Supreme Court Order 2025Ma7576 Dated January 9, 2026 — Registration in the List of Defaulters · Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
How Not to Mix the Verified Provision with the Judgment in This Case
The National Law Information Center page for Article 566, checked separately, indicates that it is in force from October 2, 2026. Subparagraph 7 makes non-dischargeable a claim that the debtor in bad faith did not enter in the list, while containing a proviso providing different treatment where the creditor knew of the declaration of bankruptcy. The examination of this provision as a whole therefore cannot be concluded by asking only about the debtor's knowledge.
The issue on which the Supreme Court focused in this case was whether the debtor was aware of the future indemnity obligation. The existence of the proviso in the provision is not taken as a basis for assuming that the plaintiff actually knew of the declaration of bankruptcy. Conversely, since the proviso may be important in other cases, the main issue of the judgment is kept distinct from the structure of the provision as a whole.
Article 566 also contains other categories of non-dischargeable claims. Transferring the analysis of knowledge in this piece unchanged to other categories, such as taxes or child support, or to the discharge structure of individual rehabilitation, goes beyond the scope of this material. One verified provision and four court documents are not presented as having verified all subsequent amendments and case law, or the law applicable to any individual matter.
Sources for this section: Article 566 of the Debtor Rehabilitation and Bankruptcy Act — version shown as in force from March 1, 2026 · Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
What Remains After This Judgment
The published judgment does not show all of the plaintiff's and defendant's written submissions. Since the material examined does not reveal the full content of the defendant's explanations or how they were assessed, it cannot support a conclusion that the defendant's other explanations were all untrue. The general factor cited by the Supreme Court, namely the debtor's economic and psychological circumstances, likewise does not permit a specific psychological diagnosis of this party.
What can be drawn from this case is clear. The fact that the debtor once knew of the guarantee relationship and the fact that the debtor was aware of a particular debt at the time of discharge must be linked by evidence. Where only the fact of omission remains, the debtor's failure to prove good faith cannot take the place of that link. Conversely, if knowledge of the debt is established, an explanation that it was not deliberately concealed may not be enough.
The question left for the reader is more specific than "why was the name left out?" What does the material under examination show about who knew of which debt, and at what point in time? And are the periods and facts that the material does not reach being filled in with impressions of the parties?
Sources for this section: Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case · Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement
Sources and verification notes
- Supreme Court Judgment 2023Da266031 rendered on December 12, 2024 — Reimbursement ↗
The operative part, Reasons 1 to 4 and the summary of the judgment were all checked directly on the National Law Information Center. The loan of KRW 100 million, the guarantee limit of KRW 72 million and the subrogated payment of KRW 60 million were kept distinct. The disposition was reversal and remand; the outcome after remand was not checked.
Checked 2026-09-30 - Busan District Court Judgment 2022Na58575 Decided July 20, 2023 — appellate judgment in the same case ↗
Full text of the operative part and Reasons 1 to 3 checked. Confirmed were the correction of the loan amount, the addition of the results of the order to the bank to produce financial transaction information, the four circumstances used to infer knowledge, and the order for payment. This judgment was reversed by the Supreme Court judgment cited above.
Checked 2026-09-30 - Busan District Court, Eastern Branch, Judgment 2022GaDan100624 Decided July 12, 2022 — first-instance judgment in the same case ↗
Full text of the operative part and Reasons 1 to 3 checked. Confirmed were the procedural conclusion that the suit was dismissed and the reasoning on the future right of reimbursement and the participation structure. The first-instance figure of KRW 60 million for the original loan was corrected by the appellate court to KRW 100 million, so that figure was not reused as a fact of the present case.
Checked 2026-09-30 - Supreme Court Order 2025Ma7576 Dated January 9, 2026 — Registration in the List of Defaulters ↗
Full text of the operative part and Reasons 1 to 3 checked. Its citation of 2023Da266031, the scope of the service and demand records, and the relationship between the effect of discharge and registration in the list were compared. It is a separate case and was not used as material establishing the invalidity of service by public notice or the final scope of discharge.
Checked 2026-09-30 - Article 566 of the Debtor Rehabilitation and Bankruptcy Act — version shown as in force from March 1, 2026 ↗
The date of entry into force, the main text, the subparagraphs and the proviso to subparagraph 7 were checked directly against the official statute page. This is not treated as an exhaustive review comparing the entire law applicable at the time of the 2024 judgment with every subsequent change to the current law.
Checked 2026-09-30
General information and research commentary, not legal advice. Each entry identifies its facts, assumptions and sources.
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