If All Overdue Debts Are Paid by the End of May, Records Will Be Deleted... Support for Up to 2.9 Million People

Ruling Party and Government Agree to Expand Special Measures for Rapid Debt Adjustment Including Interest Reduction for Basic Livelihood Security Recipients

The People Power Party and the government have decided to support credit recovery for up to 2.9 million people who fully repay their overdue debts.

On the afternoon of the 11th, the party and government announced this decision through the "Credit Amnesty Council for the Working Class and Small Business Owners" held at the National Assembly, according to a briefing by Yoo Ui-dong, chairman of the People Power Party's Policy Committee.

Specifically, overdue debtors with debts of 20 million won or less from September 2021 to January of this year will have their overdue records deleted if they fully repay by the end of May this year. The number of beneficiaries is estimated to be up to 2.9 million.

Chairman Yoo explained the reason for support, saying, "Although they defaulted on loans due to unavoidable circumstances, even after fully repaying the overdue amount, they face difficulties in financial transactions and economic activities due to past overdue records," adding, "Considering the severe economic situation, active support for credit recovery is necessary."

Once the overdue records are deleted, restrictions on financial transactions such as card usage and loan access are expected to be lifted. Typically, if a debt is overdue for more than three months, the Credit Information Agency retains the overdue record for up to one year and shares it with financial institutions and credit rating agencies (CBs). Credit rating agencies can use the overdue records for up to five years during credit evaluations, so even after repayment is completed, financial transaction restrictions may occur.

Ruling Party and Government Discuss 'Credit Amnesty' to Delete Loan Delinquency Records for Ordinary Citizens and Small Business Owners
(Seoul=Yonhap News) Reporter Lee Jeong-hoon = On the afternoon of the 11th, Yoo Ui-dong, Chairman of the Policy Committee of the People Power Party, delivered a greeting at the Credit Amnesty Consultation Meeting for Ordinary Citizens and Small Business Owners held at the National Assembly. 2024.1.11
Photo by Lee Jeong-hoon
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The party and government also plan to expand special rapid debt adjustment measures, including interest reductions for basic livelihood security recipients. If the interest reduction rate is increased from the current 30-50% to 50-70%, it is expected that 5,000 basic livelihood recipients will experience reduced repayment burdens.

They will also strengthen debt adjustment functions for vulnerable groups by integrating financial and telecommunications debts for debt adjustment. It is estimated that up to 370,000 people have overdue both financial and telecommunications payments simultaneously. Regarding concerns about moral hazard due to the deletion of overdue records, Lee Bok-hyun, Governor of the Financial Supervisory Service, said, "The benefits apply to those who repay by May, which actively encourages repayment."

Kim Ju-hyun, Chairman of the Financial Services Commission, explained, "Those who defaulted during the COVID-19 crisis did so for reasons beyond their control rather than due to moral issues," adding, "Credit amnesty has been granted in the past as well."

The financial sector plans to prepare credit recovery support measures as quickly as possible, aiming to sign an agreement as early as next week and implement related measures.

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