[Exclusive] Delayed Communication Fees and Health Insurance Premiums to Be Reduced... Democratic Party to Promote Debtor Protection 3 Laws

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A bill is being promoted to allow overdue communication fees and health insurance premiums to also be subject to debt adjustment.

On the 19th, according to financial circles and the National Assembly, Hong Sung-guk, head of the Democratic Party's Economic Crisis Response Center, is expected to soon propose the "Three Laws to Protect Low-Income Debtors" as a package. The "Partial Amendment to the Act on Support for the Financial Life of Low-Income People" proposed by Representative Hong aims to explicitly include mobile communication service providers, telecommunication billing service providers, and the National Health Insurance Corporation as parties eligible to enter into credit recovery support agreements with the Credit Recovery Committee.

The current personal debt adjustment system is divided into public relief led by the court, such as rehabilitation and bankruptcy, and private relief led by the Credit Recovery Committee, such as individual workouts. The debt adjustment system supports those who have difficulty repaying debts normally due to heavy debt by extending repayment periods, allowing installment repayments, adjusting interest rates, granting repayment deferrals, and reducing debts.

Unlike public relief under court leadership, which has the effect of a judgment, the Credit Recovery Committee's debt adjustment procedures are based on the "Credit Recovery Support Agreement." However, under current law, the parties eligible to enter into such agreements are limited to financial companies and policy financial institutions.

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Because of this, the adjustment of non-financial debts that closely affect the lives of actual debtors, such as unpaid communication fees, small payments, and overdue health insurance premiums, faces practical limitations. In particular, communication fees constitute a significant portion of household expenses, and there are cases where overdue communication fees cause debtors to become defaulters. According to the Ministry of Science and ICT, the amount of unpaid wired and mobile communication fees stood at approximately 34.634 billion KRW as of the end of February.

In addition, a "Partial Amendment to the Civil Execution Act" will also be proposed to annually calculate and announce the specific range of seizure-prohibited amounts such as monthly living expenses, wage claims, deposits, and insurance payments. According to current law, the limit on living expenses and other amounts exempt from seizure to guarantee the debtor's minimum livelihood is 1.85 million KRW per month. For example, if the amount to be seized is 2 million KRW, only 150,000 KRW can be seized.

The problem is that since 2019, this amount has remained the same, failing to protect debtors from economic conditions such as inflation. Therefore, the amendment requires the annual calculation and announcement of the minimum and maximum amounts of living expenses and claims exempt from seizure. When calculating the amounts, current economic conditions such as minimum living expenses, minimum wage, standard living expenses, and consumer price inflation rate will be reflected to enhance the effectiveness of the system.

Also, a partial amendment to the Debtor Rehabilitation and Bankruptcy Act, which mandates "credit counseling" before applying for public debt adjustment procedures such as bankruptcy and individual rehabilitation, will be proposed together as part of the Three Laws to Protect Low-Income Debtors.

Efforts to protect low-income debtors are also supported at the party level. On the 26th, Democratic Party leader Lee Jae-myung, along with Kim Min-seok, chairman of the Democratic Party Policy Committee, will visit the Individual Rehabilitation and Bankruptcy Comprehensive Support Center in Seocho-dong, Seoul. As the economic conditions for low-income households worsen due to rising prices and interest rates, the need to protect individual debtors is increasing. The Democratic Party, the largest opposition party with 169 seats, plans to listen to voices from the field of low-income debtor protection and reflect them in policy.

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