Due to the Prolonged COVID-19 Pandemic... Household Loan Principal Repayment Grace Period Extended by Additional 6 Months

KAMCO Extends Application Deadline for Personal Delinquent Debt Purchase Fund by 6 Months

[Asia Economy Reporter Kim Jin-ho] The principal repayment deferral measure for household loans of individual debtors facing the risk of loan delinquency due to the COVID-19 crisis will be extended for six months.

The Financial Services Commission and major commercial banks announced on the 13th that they have decided to further extend the application period of the 'household loan principal repayment deferral measure' as part of support for the recovery of vulnerable individual debtors. This measure takes into account the prolonged COVID-19 situation.

First, the special pre-workout for household loans by individual financial companies, which was scheduled to end on the 30th, will be extended for six months until December 31. The support targets individual debtors who have difficulty repaying household loans due to income reduction after the COVID-19 crisis and are either delinquent or at risk of delinquency.

To qualify for the special measure, it must be proven that income has decreased due to unemployment, unpaid leave, loss of work, etc., since February last year when COVID-19 began. Eligible household loans include unsecured loans, government-guaranteed policy loans for low-income earners such as Saessal loans, and Sa-itdol loans.

The monthly income after deducting living expenses (75% of the median income standard announced by the Ministry of Health and Welfare) must be less than the amount owed to the financial institution. The 75% of the median income standard is 3.56 million KRW (for a family of four). This applies only if the debtor is currently delinquent or has a short-term delinquency of less than three months.

If the requirements are met, the principal repayment of the loan can be deferred for six months to one year. However, interest repayment deferral or reduction is not allowed. Additional financial burdens such as fees or penalty interest during the deferral period are also prohibited. Debtors wishing to defer repayment should apply to the respective financial institution.

The application deadline for the personal delinquent debt purchase fund operated by the Korea Asset Management Corporation (KAMCO) has also been extended by six months, and the scope of eligible debt for purchase has been expanded. Both the application deadline and the scope of eligible debt have been extended from the 30th to the end of this year.

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