Sae-Do-Yak Fund Purchases 1.4 Trillion Won in Delinquent Bonds Held by 180,000 Individuals

The Financial Services Commission announced on December 23 that the Sae-Do-Yak Fund has purchased long-term delinquent bonds held by credit card companies, capital companies, savings banks, non-life insurance companies, and private loan companies.

The Sae-Do-Yak Fund is a debt adjustment program in which the government buys and eliminates the debts of vulnerable groups and small business owners suffering from long-term debt.

The bonds purchased in this third round are unsecured personal bonds (including individual business owners) that have been delinquent for over seven years and are valued at 50 million won or less. The total amount is approximately 1.47 trillion won, held by about 180,000 individuals.

Immediately upon purchase, collection activities are suspended. Among the purchased bonds, debts held by socially vulnerable groups such as recipients of basic livelihood security will be written off without a separate repayment ability review. For the remaining bonds, a thorough review of repayment ability will be conducted. If the debtor is found to have lost repayment ability to a degree equivalent to personal bankruptcy, the debt will be written off within one year. If the debtor has significantly insufficient repayment ability, debt adjustment will be pursued.

Since last week, financial companies holding the bonds have notified debtors about the planned transfer of their bonds. Starting in January next year, debtors will be able to check whether their debt has been purchased, the results of their repayment ability review, and whether their bonds have been written off through the Sae-Do-Yak Fund website.

The total amount of bonds acquired by the Sae-Do-Yak Fund through three rounds of purchases is approximately 7.7 trillion won, with about 600,000 beneficiaries (including duplicates).

Next year, the Sae-Do-Yak Fund also plans to additionally purchase long-term delinquent bonds held by private loan companies (on a rolling basis), as well as target bonds held by the Korea Credit Guarantee Foundation, 17 regional credit guarantee foundations, and mutual finance institutions (Saemaeul Geumgo, Nonghyup, Suhyup, Credit Union, National Forestry Cooperative Federation). If additional unsold target bonds are identified by sector, their acquisition will also be pursued step by step.

Meanwhile, the number of private loan companies among the top 30 (by long-term delinquent bond holdings) that have joined the Sae-Do-Yak Fund agreement increased by two from eight last month to ten companies.