"People Who Made Repayment Plans but Can't Pay Due to Corona... Let's Give Them One More Chance" (Summary)

Min Byung-deok, Democratic Party Lawmaker, Proposes 'Seomin Geumyung Act'
Temporary Extension of Implementation Period from 3 to 6 Months

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] A bill has been proposed to temporarily extend the repayment plan implementation period up to 6 months after an agreement on individual debt adjustment. This aims to extend the implementation period considering that debtors who have agreed to individual debt adjustment and established a repayment plan are delayed in repayment due to COVID-19. To prevent abuse, this is a temporary law applied only once after the law takes effect. If this bill passes, it is expected to provide a basis for flexibly operating personal rehabilitation procedures during the difficult times caused by COVID-19.

According to the National Assembly and political circles on the 18th, Min Byeongdeok, 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.

According to current law and the Credit Recovery Support Agreement, if a debtor fails to implement the repayment plan under individual debt adjustment for more than 3 months without special circumstances after an agreement on individual debt adjustment is established, the effect of the individual debt adjustment is lost. This bill proposes to extend the “3 months” period to “6 months” only once based on the date the law takes effect.

This bill is part of the “Loss Compensation Act” that Rep. Min is promoting. A representative from Min’s office explained, “Recently, due to the impact of COVID-19, the financial life of ordinary people has become difficult, and accordingly, even debtors who have agreed to debt adjustment and intend to repay are finding it difficult to implement the repayment plan. The main purpose of this law is to help prevent the loss of effect of debt adjustment due to non-implementation of the repayment plan during the difficult economic period caused by COVID-19.”

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 and prepared grounds to flexibly operate personal rehabilitation procedures. The existing practical guideline, which stipulated that if a debtor delays repayment under the repayment plan for more than 3 months without special circumstances, the personal rehabilitation procedure should be dismissed, was amended so that non-fulfillment of the repayment plan during periods of financial difficulty caused by natural disasters, infectious disease outbreaks, wars, terrorism, riots, etc., would not be considered a negative factor in personal rehabilitation procedures. However, since no specific period was set, it was left to the discretion of the presiding judges. Along with this, there have been continuous calls to temporarily extend the related period considering special situations such as COVID-19.

In fact, according to the Supreme Court’s Monthly Court Statistics Report, from January to September this year, the number of personal bankruptcy applications filed with bankruptcy divisions nationwide 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.

Rep. Min stated that if the difficult economic conditions due to COVID-19 continue even after this bill passes, he intends to propose similar bills additionally. A representative from Min’s office said, “We initially set it at 6 months, but if the economic situation remains difficult after the law is enacted, we are considering proposing a bill to extend the period by another 6 months. We will decide comprehensively based on next year’s economic situation and social conditions.”

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