Reporter Hwang Jin-hwan
Individual debtors who have been affected by the COVID-19 crisis can further postpone the deadline for repaying the principal of their household loan until the end of September.
The Financial Services Commission announced on the 26th that the Financial Supervisory Service, all financial institutions, and related institutions will join forces to extend the application period of the ‘financial company pre-workout exception’ by three months until September 30. The deadline for applying for special cases, which was extended three times since the enforcement on April 29, 2020, until the end of June, has been extended once more.
The target of support is individual debtors who are at risk of delinquency or delinquency in household loans due to a decrease in income following the COVID-19 crisis.
You must be able to prove that your income has decreased due to unemployment, unpaid leave, loss of work, etc. since February 2020, when the COVID-19 outbreak occurred.
Among the applicable household loans, credit loans, loans from the Guarantee Department’s policy to low-income earners, and side-dollar loans are applicable. Mortgage loans such as home mortgage loans and Jeonse guarantee loans are excluded from the application. Household credit loans received by sole proprietors in the name of individuals are included in the scope of support.
In addition, the monthly income minus the cost of living must be less than the monthly payment to the financial company, and this applies to short-term delinquency less than 3 months from immediately before delinquency. However, repayment of the principal is deferred, and there is no deferral or reduction of repayment of interest.
For long-term delinquents, the application period for the Korea Asset Management Corporation (Kamco) personal delinquency bond purchase fund will be extended by six months so that they can apply until the end of December. The bonds to be purchased are personal unsecured loans that have been delinquent from February 2020 to the end of December.
For purchase receivables, debt adjustment is supported, such as exemption from penalty for overdue interest, deferment of collection such as request for repayment, deferment of repayment for up to two years depending on the extent of the debtor’s income recovery, and debt reduction. To this end, Camco purchases up to KRW 2 trillion of bonds with its own resources.
The FSC plans to transfer some of the delinquency bonds of small business owners and self-employed people purchased from the private delinquency bond purchase fund to the ‘debt adjustment program for small business owners and self-employed people’ scheduled to be launched in October.
In addition, the financial authorities announced that they plan to launch a special guarantee product for those with the lowest credit in October to reduce the burden of repayment for the underprivileged. Efforts to expand the supply of financial services for low-income earners will also continue.
