Government to Promote Enactment of 'Personal Debtor Protection Act' Within the Year... Expanding Microfinance to 12 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The government has decided to push for the enactment of the "Personal Debtor Protection Act" (Act on the Management of Personal Financial Claims and Protection of Personal Debtors) within this year to reduce the debt burden on individual debtors.

On the 6th, Kim Joo-hyun, Chairman of the Financial Services Commission, announced the government's measures to stabilize livelihood finance at a party-government consultation meeting held with the People Power Party.

Chairman Kim stated, "Through the promotion of the Personal Debtor Protection Act, we plan to activate debt adjustment, ease burdens during delinquency, and improve deposit practices," adding, "We will submit the bill within this year."

Additionally, policy-based financial services for low-income citizens will be expanded. The policy-based livelihood finance, which will be expanded to around 12 trillion won, aims to support debt adjustment for vulnerable groups such as those with the lowest credit ratings. Chairman Kim said, "We will expand the supply scale of policy livelihood finance and strengthen debt adjustment support for low-credit and low-income vulnerable groups."

Infrastructure for an "online one-stop refinancing loan," which allows borrowers to compare loan interest rates and switch to lower rates, will also be established. Chairman Kim said, "We will create a refinancing loan transfer system that enables comparison and selection of credit loans from banks, savings banks, card companies, and capital companies," adding, "A task force (TF) will be formed with the financial sector and fintech industry to prepare detailed system operation plans."

The requirements for the Safe Conversion Loan will be eased starting the next day. The relaxation involves adjusting the housing price requirement to 600 million won and the income requirement to 100 million won for the "Preferential Safe Conversion Loan," which refinances variable-rate mortgage loans into fixed-rate loans. To reduce fairness disputes, the "Policy Mortgage Home Loan" will also be supplied with relaxed housing price and income requirements regardless of whether it is a new purchase or refinancing.

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