"Temporary Extension of Debt Repayment Plan Implementation Up to 6 Months"...Related Bill Proposed

Assemblyman Min Byeongdeok Proposes 'Seomin Geumyung Act'
Temporary Law Considering COVID-19 Situation

Min Byung-duk, Member of the Democratic Party of Korea Photo by Yonhap News

[Asia Economy Reporter Kiho Sung] A bill has been proposed to temporarily extend the repayment plan implementation period up to six months after the agreement on individual debt adjustment. This is intended to help debtors facing financial difficulties due to COVID-19 and is expected to provide a basis for more flexible operation of individual rehabilitation procedures.

According to the National Assembly and political circles on the 18th, Min Byung-duk, a member of the Democratic Party of Korea, recently introduced the "Partial Amendment to the Act on Support for Financial Life of Ordinary People (Ordinary People’s Finance Act)" containing such provisions as the main sponsor.

Under the current law and the Credit Recovery Support Agreement, if a debtor fails to implement the repayment plan under individual debt adjustment for more than three months without special circumstances after the agreement on individual debt adjustment is established, the effect of the individual debt adjustment is lost. This bill proposes to temporarily extend the "3 months" period to "6 months" based on the date the law comes into effect.

This bill is part of the "Loss Compensation Act" that Representative Min is promoting. A representative from Min’s office explained, "Recently, due to the impact of COVID-19, the economic life of ordinary people has become difficult, and as a result, even debtors who have agreed to debt adjustment and have the intention to repay are finding it difficult to implement the repayment plan. The main purpose of this law is to help ensure that the effect of debt adjustment is not lost due to non-implementation of the repayment plan during the period of economic hardship caused by COVID-19."

In fact, according to the Supreme Court’s Monthly Court Statistics Report, the number of individual bankruptcy applications filed with bankruptcy divisions of courts nationwide from January to September this year was 37,293, slightly down from 37,451 during the same period last year, but significantly increased compared to 34,135 in 2019 and 32,113 in 2018.

Earlier, the Seoul Rehabilitation Court, considering the COVID-19 situation, revised the practical guidelines through a resolution of the full judges’ meeting in April last year to provide grounds for flexible operation of individual rehabilitation procedures. The existing practical guideline, which stipulated that if a debtor delays repayment under the repayment plan for more than three months without special circumstances, the individual rehabilitation procedure should be dismissed, was amended so that non-performance of the repayment plan during periods of financial hardship caused by natural disasters, infectious disease outbreaks, wars, terrorism, riots, etc., would not be considered a negative factor in individual rehabilitation procedures. However, since no specific period was set, the decision was left to the discretion of the presiding judges.

Representative Min stated that if the difficult economic conditions due to COVID-19 continue even after the passage of this bill, he intends to propose similar bills additionally. A representative from Min’s office said, "We initially set it at six months, but if the economic situation remains difficult after the bill is enacted, we are considering proposing an additional bill to extend it by six months. We will make a decision based on a comprehensive assessment of next year’s economic situation and social conditions."

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