Naju-si, Bulk Waiver of Overdue Interest for Long-term Debtors of Resident Income Project Loans

[Asia Economy Honam Reporting Headquarters Reporter Kim Yukbong] Naju City, Jeollanam-do (Mayor Kang In-gyu) announced on the 20th that it will waive the overdue interest in bulk for long-term debtors struggling to repay loans from the resident income project.

The city comprehensively considered the difficulties caused by overdue interest for debtors of the resident income project loans excluded from the government's debt reduction system, the resulting social and economic losses, and citizens' opinions, and decided to waive the overdue interest in bulk after revising related ordinances and obtaining the city council's consent.

This decision originated from the situation where farmers who invested in agricultural production infrastructure loans in response to overseas market openings such as the Uruguay Round (UR) negotiations in the 1990s could not bear the long-term overdue interest.

The city had relied on voluntary repayment by debtors or forced collection measures to resolve the issue, considering fairness with existing payers and moral hazard of debtors.

However, the vicious cycle of debt, which is impossible to overcome on their own due to the burden of overdue interest amounting to twice the principal, has emerged as a social and economic issue in rural areas.

Although the government has prioritized inclusive finance to expand opportunities for debtors without repayment ability to reorganize their debts, local government bonds are not included in the current legal framework, causing difficulties in resolving the problem.

The resident income project bonds held by the city are bonds up to 25 years old, most of which have passed the five-year statute of limitations set by the Local Finance Act, but the statute has been continuously extended through judicial claims.

The waiver targets are debtors who received loan support through the resident income project from 1994 to 2003 and from 2008 to 2010, and as of the 13th, main debtors and joint guarantors who still have outstanding loan debts.

The waived amount applies to unpaid overdue interest as of the 13th and overdue interest that will be imposed until the voluntary payment period scheduled for next month.

Accordingly, overdue interest worth approximately 2.07 billion KRW for 86 main debtors and 106 joint guarantors identified by the city will be reduced.

The city plans to send overdue interest waiver notices to the relevant debtors within this month.

Debtors can completely settle their loan debts by paying the principal, agreed interest, and litigation costs during the voluntary payment period scheduled for next month.

However, if the loan is not repaid during the voluntary payment period, an annual 10% overdue interest will be imposed again, and legal measures such as collateral disposition and forced execution may be enforced depending on the situation.

Vulnerable groups such as basic livelihood security recipients can also pay in installments by submitting the required supporting documents.

A city official said, “We hope this bulk waiver of overdue interest will be a stepping stone for the economic recovery of long-term overdue debtors,” and added, “We expect it to help revitalize the local economy, which has been stagnant due to COVID-19, even if only a little.”

This content was produced with the assistance of AI translation services.