The “New Leap Fund,” a bad bank initiative aimed at canceling debts of individuals with unsecured loans under 50 million won that have been in arrears for over seven years, has purchased long-term delinquent debts totaling 440.9 billion won. The Financial Services Commission announced on the 26th that the fund has acquired debts held by regional credit guarantee foundations, mutual finance companies, and loan companies that meet these criteria.
As a result of this purchase, a total of 47,000 individuals will be freed from debt collection efforts. Debts belonging to socially vulnerable groups, such as recipients of basic living subsidies, will be written off without a separate repayment ability review. Other debts will undergo a review, and if the debtor is assessed as losing repayment ability similar to bankruptcy status, the debt will be written off within a year. If the debtor has significantly insufficient repayment ability, debt adjustment will be pursued.
Starting from last week, creditor financial companies have informed debtors of the intention to transfer the debts. Debtors can check on the New Leap Fund’s website to see whether their debt has been purchased, the result of the repayment ability review, and whether their debt will be written off.
To date, the New Leap Fund has acquired about 8.2 trillion won in liabilities over four rounds, benefiting about 640,000 people, including those benefiting multiple times. The fund plans to sequentially purchase long-term delinquent debts held by mutual finance companies within the first half of the year, starting with this fourth purchase round. Notably, 1,085 cooperatives under the Saemaul Geumgo (National Agricultural Cooperative Federation) are involved, with purchases scheduled in stages from February to April. In March, the fund will acquire long-term delinquent debts held by Saemaul Geumgo (second batch), fisheries cooperatives, and loan companies.
Additionally, the participation of the loan industry in the New Leap Fund is increasing. Among the top 30 loan companies holding long-term delinquent debts, 13 have joined the fund’s agreement, an increase of three from the end of last year.