Debt Relief for 291,000 Small Debtors Overdue for More Than 10 Years

Impact of the 'Support Measures for Long-term Small Debt Defaulters' Announced in November 2017

[Asia Economy Reporter Jin-ho Kim] The Financial Services Commission announced on the 17th that, according to the 'Support Plan for Long-term Small-balance Delinquent Debtors' announced in November 2017, it has completed the debt write-off for 291,000 debtors (1.5 trillion KRW) out of 335,000 debtors (1.6 trillion KRW) within the National Happiness Fund. Long-term small-balance delinquent debtors refer to those who have been delinquent on loans of 10 million KRW or less for over 10 years.

Since the announcement of the plan, the National Happiness Fund has conducted a comprehensive review of the repayment ability of 403,000 unarranged debtors who have been delinquent for over 10 years and suspended collection efforts for 335,000 of them. This accounts for about 1.7% of the approximately 20 million household loan borrowers in total.

Over the past four years, through board reviews, the Fund has prioritized the write-off of long-term small-balance delinquent debts for 173,000 debtors (900 billion KRW), including expired claims. Specifically, periodic write-offs of some expired claims, court discharge decisions, and debts of deceased persons have been carried out since the announcement of the measures. For debts held by Hanmaeum Financial and Hope Holdings (132,000 debtors, 700 billion KRW), the write-off process was completed last December following the liquidation of the institutions.

At the point three years after the suspension of collection, as of the end of April, the National Happiness Fund will hold a board meeting tomorrow to write off delinquent debts of 118,000 debtors (600 billion KRW) out of 162,000 debtors (700 billion KRW) remaining in the Fund, excluding 44,000 debtors who require additional repayment ability review.

For the 44,000 debtors requiring additional review, if they are found unable to repay after the assessment, their debts will be written off by the end of the year.

Meanwhile, the government plans to continue support for long-term small-balance delinquent debtors. For long-term small-balance delinquent debts held by general financial companies rather than the National Happiness Fund, the Long-term Small-balance Delinquent Debtor Support Foundation has purchased debts and suspended collection (9,000 debtors, 35 billion KRW) upon application and determination of inability to repay. Write-offs for these debts will also be implemented sequentially starting in the second half of this year, three years after the suspension of collection.