From the 29th, up to 1-year principal repayment deferral for individual debtors affected by COVID-19

[Asia Economy Reporter Kim Hyo-jin] The Financial Services Commission and the Financial Supervisory Service announced on the 27th that from the 29th, individual debtors facing delinquency risks due to the impact of the novel coronavirus infection (COVID-19) can apply for a principal repayment deferral on household loans.

This applies to debtors whose ability to repay loans has decreased due to reduced income, and applications can be made to individual financial companies or the Credit Counseling and Recovery Service (CCRS). Principal repayment can be deferred for up to one year. Interest must be paid as usual. Internet-only banks will implement this from the 7th of next month.

This measure consists of two parts: the special pre-workout for household loans by financial companies and the CCRS debt adjustment special case. Debtors using low-income financial loans such as Saemaul Loans must apply for repayment deferral to the financial company from which they borrowed, not to the guarantee institution or CCRS.

Except for low-income financial loans, if there is only one creditor financial company for the loan requiring repayment deferral, the application can be made to that financial company; if there are two or more, the application can be made collectively to the CCRS.

If less than one month remains until the principal repayment due date, applications can only be made to individual financial companies, so it is advisable to apply well in advance considering the processing time. Applications can also be made to individual companies when short-term delinquency of less than three months occurs, but overdue payments due to delinquency must be paid.

Unlike individual financial companies, applications to the CCRS can be made regardless of the principal repayment due date. Once the application is received, the calculation of delinquency days stops, so there is no need to worry about delinquency occurrence or prolongation.

The special pre-workout for household loans by individual financial companies targets individual debtors whose income has decreased after the COVID-19 outbreak and who are delinquent or at risk of delinquency on household loans. Monthly income after deducting living expenses (75% of the median income according to the Ministry of Health and Welfare notification) must be less than the monthly repayment amount.

Applications for repayment deferral can be made for unsecured loans excluding secured and guaranteed loans among household loans, guaranteed policy low-income financial loans, and Sae-it-dol loans, etc. For revolving credit loans (overdraft accounts), the special case applies only to banks and savings banks. If the principal cannot be repaid during the remaining maturity after the deferral period ends, repayment schedule adjustments (including maturity extension) can be negotiated.

The CCRS debt adjustment special case targets COVID-19 victims whose net assets are less than their total debt. Applications can be made regardless of whether the loan is household or business, as long as it is not guaranteed low-income financial loans or secured/guaranteed unsecured loans. When applying to the CCRS, all of the debtor’s unsecured loans are deferred simultaneously based on a specific point in time.

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