Gov’t to cancel small debts for 462,000 people

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Gov’t to cancel small debts for 462,000 people

A 46 year-old man who used to deliver parcels for a living has been struggling financially since he was involved in a major car accident 12 years ago. He has been particularly struggling with the huge interest that has accumulated on the 8 million won ($7,520) loan he borrowed from a nonbanking financial company in order to purchase his parcel delivery truck.

In 2013 the government purchased his debt and readjusted the loan payment. But without a steady income, he has still been avoiding constant calls to pay 3.6 million won, which is a 60 percent deduction on the initial loan.

A 53 year-old man who used to work in the trading business is also struggling with a loan. After signing a loan guarantee for a friend 10 years ago, he ended up with a 50 million won debt as his friend’s business went bust. The man also saw his own business go bankrupt and has been suffering not only from his own debt but also the 50 million won that he guaranteed for his friend.

Both of these men will have their debt completely written off, according to the government.

According to the Financial Service Commission, 462,000 people struggling with low income and suffering from small debts that have been holding them back from living a quality life will be relieved of their burden in the next three years. This was a promise President Moon Jae-in made during his election campaign.

The government estimates that in total 3.2 trillion won of debt will be erased - an average 6.93 million won per person.

Some 252,000 people will have debts amounting to 1.2 trillion won written off while 210,000 people that guaranteed other people’s loans, estimated at 2 trillion won, will be exempted from paying back the debt. These are people who are deemed to have no ability to pay back the loans.

All of the individuals that will receive government help have a principle loan that is less than 10 million won as of Oct. 31 last year, and have failed to pay off the debt for more than 10 years.

They are also all in the bottom 60 percent income bracket, have no property under their name and have never left the country.

The government in November said it will be looking into the small debts that 1.59 million people owe and have failed to pay over the last 10 years.

Among those debtors the government looked at 430,000 people whose debts were bought by the government but no readjustment was made. Of those, 378,000 turned out to be in the bottom 60 percent by income. Of that number, 92,000 people were scratched off the list as they owned real estate or automobiles and 59,000 had traveled abroad at least once in the last three years.

However, people that were excluded will have the opportunity to justify why they own property, vehicles or have traveled. The government has also decided to write off the debt of 210,000 of the 236,000 people that were in debt after guaranteeing loans. These people are those that have no assets under their name.

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