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Gov't buys $3.79 billion in long-term delinquent loans from vulnerable individuals

Published: 30 Oct. 2025, 16:20 Updated: 30 Oct. 2025, 18:55

Fliers advertising credit card loans is posted on a street in Seoul on Oct. 20. [YONHAP]

The government has completed the first round of purchases of long-term delinquent loans — worth 5.4 trillion won ($3.79 billion) — as part of its debt restructuring program for individuals, government officials said on Thursday.

The state-run New Leap Fund, a bad-bank vehicle launched this month by the Financial Services Commission, aims to help long-term delinquent borrowers who have lost the capacity to repay their loans.

The program is expected to write off or restructure a total of 16.4 trillion won in bad debts, benefiting an estimated 1.13 million people.

The first batch of purchased loans consists of unsecured debts of individuals and self-employed borrowers that have been overdue for more than seven years and are worth less than 50 million won each.

These loans were previously held by the Korea Asset Management Corp. and the National Happiness Fund and invoved around 340,000 debtors.

Debts owed by low-income or socially vulnerable groups will be written off by the end of the year without additional review. Other debts will undergo screening to determine whether they should be written off or restructured.

Starting in November, the fund plans to purchase long-term delinquent loans held by private financial organizations, including banks, insurance companies and public institutions, government officials said.

Yonhap