Nearly 40,000 Borrowers Received 50% Debt Relief... Doubled in 3 Years

[Asia Economy Reporter Buaeri] The number of borrowers who borrowed money from financial institutions but lacked the ability to repay and received a reduction of more than 50% on their loan principal nearly doubled in three years.

According to data received on the 12th from the Credit Recovery Committee by Choi Seung-jae, a member of the National Assembly's Political Affairs Committee from the People Power Party, 37,727 people received a reduction of more than 50% on their loan principal through personal workouts (debt adjustment) by the Credit Recovery Committee last year. Compared to 19,943 people in 2018, this is an increase of 17,784 people (89%) in three years.

As of July this year, the number of people who received more than 50% principal reduction has already reached 21,501.

The ratio of those receiving more than 50% principal reduction to the total confirmed personal workouts also increased from 27.7% in 2018 to 45.6% in July 2022.

The number of vulnerable groups who were granted a reduction of more than 80% of the principal has also steadily increased.

The number of people receiving more than 80% principal reduction increased from 559, which was about 0.8% of the total in 2018, to 4,378, or 5.1%, in 2021.

As of July 2022, 5.6% of all confirmed personal workouts received a reduction of more than 80% of the principal.

The average age of those receiving reductions was in their 40s to 50s, and the average reduction amount was around 10 million KRW. The average reduction amount for those receiving more than 50% principal reduction increased by more than 45%, from about 19.94 million KRW in 2018 to about 37.27 million KRW in 2021.

Representative Choi said, "Not only has the number of personal workout applications increased due to COVID-19, but the vulnerable groups who need more than 50% principal reduction have also greatly increased," adding, "Debt adjustment programs such as the New Start Fund must be urgently implemented to support vulnerable borrowers such as small business owners and self-employed people who have suffered greatly from COVID-19, so that they do not fall into a workout state."