Application Period for Personal Delinquent Debt Purchase Fund Extended for One Year Until the End of Next Year
Over 50,000 Bonds and 312.7 Billion Won in Bond Amounts over Two and a Half Years
[Asia Economy Reporter Yu Je-hoon] The government and financial sector have extended the application period for the 'Personal Delinquent Debt Purchase Fund,' established to support individual debtors struggling due to the COVID-19 pandemic, by one more year until the end of next year.
The Financial Services Commission, all financial sectors, and related organizations announced on the 27th that they made this decision considering the ongoing need for active debt restructuring and rehabilitation support for delinquent individual debtors.
The Personal Delinquent Debt Purchase Fund, operated by Korea Asset Management Corporation (KAMCO), is a system that acquires non-performing loans (NPLs) that have been delinquent for a certain period, waives delinquency interest for individual debtors, and postpones active collection efforts. Since the system was implemented in June 2020 until the 26th of this month, KAMCO's performance with the Personal Delinquent Debt Purchase Fund has reached 51,609 cases by number of claims and 312.7 billion KRW by claim amount.
With this extension, the purchase of personal delinquent debt will target claims with delinquencies occurring between February 1, 2020, and December 31 of next year for unsecured personal loans. The purchase amount is up to 2 trillion KRW (face value basis). However, claims undergoing court or Credit Counseling & Recovery Service debt adjustment procedures, or claims with disputes over existence or ownership, are excluded from the purchase target.
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When KAMCO receives a purchase application, the financial institution holding the relevant claim must immediately stop collection efforts and implement debtor protection measures. After purchasing the claim, KAMCO will waive delinquency interest for up to one year and postpone active collection such as repayment demands. Additionally, depending on the debtor's income recovery level, rehabilitation support will be provided through repayment deferral (up to one year), long-term installment repayment (up to 10 years), and debt reduction (up to 60%).
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