Seoul City Partners with Seoul Rehabilitation Court to Rescue Youths in Debt Crisis

Seoul Financial Welfare Counseling Center and Seoul Rehabilitation Court Launch 1-on-1 Customized 'Youth Financial Guide' Project
First Collaborative Model Between Judiciary and Public Institutions

[Asia Economy Reporter Lim Cheol-young] The Seoul Financial Welfare Counseling Center of the Seoul Welfare Foundation announced on the 30th that it will launch the 'Youth Financial Guide' project in cooperation with the Seoul Rehabilitation Court on the 1st of next month. The Youth Financial Guide is a program in which the Seoul Financial Welfare Counseling Center provides one-on-one customized financial counseling to young people who have applied for personal rehabilitation at the Seoul Rehabilitation Court due to a crisis of malignant debt.

Youth debtors applying for personal rehabilitation tend to focus on obtaining information quickly to receive monthly repayment amounts or court decisions as they are desperate to escape difficult situations caused by malignant debt. As a result, they often overlook important matters such as the procedures prescribed by law or precautions to properly repay the debt during the three-year repayment period after the approval of the repayment plan.

The counseling provided by the center under the Youth Financial Guide includes guidance on the personal rehabilitation process, strategies for successful repayment, response measures in case of rehabilitation cancellation, basics of income and expenditure management, and welfare information specialized for the youth such as youth housing and youth savings accounts.

The Seoul Rehabilitation Court has prepared a plan to shorten the repayment period for young people who complete the counseling and do not have any of the five disqualifying reasons, to help financially distressed youth recover more quickly and to ensure that the Youth Financial Guide counseling, a collaborative project with the center, achieves effective results.

The five disqualifying reasons are: ▲ if the cause of the debt leading to personal rehabilitation is due to gambling, speculative consumption, or gambling-like games ▲ if the repayment rate in the repayment plan is less than 20% ▲ if the total debt amount is 150 million KRW or more ▲ if there are two or more individual creditors ▲ if the repayment period for priority personal rehabilitation debts such as taxes or health insurance exceeds half of the total repayment period. Youth rehabilitation debtors who do not fall under these five reasons may have their repayment period shortened from the existing three years to up to two years after completing the counseling.

After several rounds of discussions since last year, the two organizations agreed to jointly promote this project. In particular, the youth age group was considered most significantly because they have a strong will for economic recovery and flexible thinking that can reestablish financial awareness.

Park Jeong-man, director of the Seoul Financial Welfare Counseling Center (lawyer), said, “We hope that the Youth Financial Guide can provide a path of hope for young people who want to overcome failure.”

Meanwhile, the Seoul Rehabilitation Court and the Seoul Financial Welfare Counseling Center plan to further discuss support measures for small business debtors who have been directly hit by COVID-19. The Seoul Financial Welfare Counseling Center provides financial welfare services to Seoul citizens suffering from malignant debt, including ▲ public debt adjustment support (personal bankruptcy, personal rehabilitation) to manage the scale of malignant debt ▲ public financial counseling and financial education ▲ linkage to welfare services such as housing and jobs to support recovery.

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