Seoul, South Korea – The South Korean government has announced an extension of debt relief measures aimed at providing financial support to vulnerable individuals and households struggling with debt. The Financial Services Commission (FSC) on [Date] unveiled a comprehensive plan that includes expanding the operation of a personal overdue debt purchase fund and enhancing customized debt restructuring programs for specific groups.
Debt Purchase Fund Extended
To address the increasing burden of debt among individuals, particularly those affected by the prolonged economic downturn, the FSC will extend the operation of the personal overdue debt purchase fund for an additional six months until the first half of next year. This fund, initially launched in June 2020, allows financial institutions to sell their overdue personal loans to the Korea Asset Management Corporation (KAMCO), preventing excessive debt collection practices.
Enhanced Debt Restructuring for Vulnerable Groups
The FSC has also introduced several measures to strengthen debt restructuring support for vulnerable groups, including low-income households, people with severe disabilities, and young adults.
Complete Debt Forgiveness: Individuals receiving basic livelihood benefits and those with severe disabilities who have been in arrears for over a year on small loans of 5 million won or less will be eligible for complete debt forgiveness after a one-year repayment grace period.
Increased Debt Relief for Short-Term Arrears: Individuals receiving basic livelihood benefits, those with severe disabilities, and senior citizens over 70 years old who are in short-term arrears will be eligible for up to a 15% principal reduction.
Additional Support for Young Adults: Young people aged 34 and under who are undergoing a personal workout plan through the Credit Recovery Foundation will be eligible for up to a 20% debt reduction if they make consistent repayments for one year and then make a lump-sum payment.
Job Seekers: Unemployed individuals participating in government-sponsored job training programs will be eligible for lower interest rates and increased debt forgiveness if they successfully find employment.
Accessing Debt Relief
Individuals seeking debt relief can visit one of the 50 integrated support centers for low-income households nationwide or use the Credit Recovery Foundation's online counseling service or mobile app.
Continued Support
The FSC emphasized its commitment to providing ongoing support to vulnerable individuals and households struggling with debt. By expanding debt relief measures and enhancing customized debt restructuring programs, the government aims to alleviate the financial burden on those most in need and promote economic recovery.
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