Debt Collection Halted for 110,000 People, Debt Relief Support for Debtors

The government will support approximately 110,000 debtors by purchasing 1 trillion won worth of old debts (long-term overdue receivables), thereby halting debt collection activities. This measure is intended to help individuals facing difficulties due to debt start anew.

The Financial Services Commission (FSC), in a meeting with representatives from nine securitization companies to review the results of purchasing assets for the New Leap Fund, announced that it has decided to purchase 1.0572 trillion won worth of receivables (affecting 113,000 people) where personal unsecured debts have been overdue for more than seven years, using the New Leap Fund.

Once the New Leap Fund purchases the overdue receivables, collection will cease immediately. Debts of socially vulnerable groups, such as recipients of basic livelihood security, will be extinguished without a separate assessment of repayment ability.

Korea Asset Management Corporation (KAMCO) has completed purchase negotiations for 1.0314 trillion won worth of debts with 45 securitization companies, excluding Genesis. KAMCO will sequentially purchase 1.0056 trillion won worth of debts from four companies, including Sangroksoo and KB Star, by the end of this month, and 25.8 billion won worth of debts from the remaining 41 companies by the end of July. Sangroksoo will proceed with liquidation procedures after selling approximately 130 billion won worth of debts.

The Financial Services Commission will strengthen its surveillance and supervision of the overall non-performing loan securitization market.