Seoul: The government has finalized its initial phase of acquiring long-delinquent loans amounting to 5.4 trillion won (US$3.79 billion) to aid individuals under its debt restructuring initiative, officials announced.
According to Yonhap News Agency, the state-operated New Leap Fund, which the Financial Services Commission (FSC) introduced this month, is designed to assist borrowers who have been incapable of repaying their debts for an extended period. This program aims to either write off or restructure up to 16.4 trillion won in bad debts, potentially assisting around 1.13 million individuals.
The initial acquisition includes unsecured debts from individuals and self-employed borrowers, which have been overdue for over seven years and each valued at less than 50 million won. Previously, the Korea Asset Management Corp. (KAMCO) and the National Happiness Fund managed these loans, which involved about 340,000 debtors.
Debts owed by low-income or socially vulnerable groups will be written off by the end of the year without further review. In contrast, other debts will be subject to screening to decide if they should be written off or restructured.
Starting in November, the fund intends to broaden its purchases to include long-delinquent loans held by private financial entities such as banks and insurance firms, as well as those managed by public institutions, officials stated.