Gov't considers deleting overdue debt records for small business owners

A bank in downtown Seoul is pictured on Wednesday. [YONHAP]

The government is considering deleting overdue debt records for small business owners and people in vulnerable classes that had piled up during the Covid-19 pandemic.

An official from the presidential office told JoongAng Ilbo on Monday that negotiations with financial companies are underway, and an agreement could be reached as early as before the Lunar New Year holidays, which fall in the second week of February.

The measure was initially proposed on Jan. 4 during a policy briefing meeting President Yoon Suk Yeol attended.

"Small business owners and people in vulnerable situations face challenges in obtaining various loans due to existing overdue debt records," Park Chun-sup, the president's secretary for economic affairs, said after the meeting. "There are past precedents of deleting the records."

When a person fails to repay their debt for more than three months, the record is stored at the Korea Credit Information Services for a maximum of one year.

This information is then shared among financial companies and credit bureaus, where it is retained for five years.

Even after settling their debts, people with such records encounter difficulties in accessing various financial services.

They struggle to apply for fresh loans and face challenges when applying for a credit card.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]