Curbing Extensions on Long-Term Delinquent Bonds...
Relief Through Write-Off Procedures
Enhanced Fairness and Practicality with External Expert Review
The Ministry of SMEs and Startups has decided to halt the indiscriminate extension of the statute of limitations on special bonds that cannot be recovered. This measure aims to initiate the write-off process for bonds whose statute of limitations has expired, thereby relieving debtors from collection pressures and providing them with an opportunity to make a fresh start.
On August 22, at Dream Square in Mapo-gu, Seoul, Vice Minister Noh Yongseok presided over the fourth roundtable meeting aimed at supporting the recovery of small business owners and strengthening their safety net. During the meeting, the ministry announced an "Improvement Plan for Debt Adjustment" designed to ease the repayment burden on small business owners and self-employed individuals whose ability to repay loans has weakened, thereby helping them lay the foundation for a new start.
The ministry will stop the indiscriminate extension of the statute of limitations for unrecoverable "special bonds." In response to concerns that the previous practice of indiscriminately extending the statute of limitations has led to a growing number of long-term delinquent borrowers, the ministry has decided to refrain from extending the statute of limitations for special bonds (written-off bonds) that are virtually impossible to recover. This measure is intended to address the inefficiency in bond management caused by unnecessary statute suspension procedures and to alleviate the excessive burden on debtors.
Going forward, the decision to extend the statute of limitations on bonds will be made after a comprehensive assessment of the debtor's financial status and recovery prospects. To ensure professionalism and fairness in the review process, a "Risk Management Committee" composed of external experts such as lawyers and financial industry professionals will conduct thorough evaluations. The ministry expects that, through the write-off process for bonds whose statute of limitations has expired, debtors will be able to escape collection pressures and have the conditions necessary for a fresh start.
The ministry also operates a debt adjustment program for small business owners facing management difficulties. According to a satisfaction survey conducted among beneficiaries of the "COVID-19 Damage Small Business Owners Installment Repayment Special Support," which has been implemented as part of the second supplementary budget since July 30, over 90% expressed satisfaction with direct financial support measures such as "extension of repayment period" (99.5%), "interest rate reduction" (97.2%), and "relief of monthly repayment burden" (96.6%).
Satisfaction with the simplified, online-centered application process reached 97.2%, while satisfaction with the plan to consolidate and manage multiple loan accounts into a single account was 98.9%, indicating high marks for policy convenience. In particular, the ministry noted that the most frequently cited advantage of account consolidation was "reduced risk of delinquency due to fixed payment dates and amounts" (51.8%), demonstrating that the system is making a tangible contribution to the management stability of small business owners.
Meanwhile, the ministry is swiftly addressing suggestions raised at previous relay roundtable meetings. In response to the opinion expressed at the last meeting that it would be beneficial for the Hope Return Package's specialized employment intensive training to be conducted in a short, focused period, the ministry plans to survey small business owners' preferred learning methods and incorporate the results. In addition, to raise awareness of the Hope Return Package, a support program for closed small businesses, the ministry will promote it through various channels and platforms-including YouTube, TV broadcasts, portal sites, and small business owner communities-starting in the second half of this year.
Vice Minister Noh stated, "I am very pleased that the 'COVID-19 Damage Small Business Owners Installment Repayment Special Support' policy announced at the first roundtable meeting has received high satisfaction on the ground," adding, "I hope that the decision to halt the extension of the statute of limitations, announced at this meeting, will provide small business owners and self-employed individuals with an opportunity for recovery and a solid foundation for a new start."
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