Lending Industry Forgives Record 79.7 Billion Won in Debt for Financially Vulnerable

The lending industry has forgiven 79.7 billion won in debt for over 8,000 financially vulnerable individuals last year, marking the largest amount since the introduction of the voluntary debt adjustment system in 2012.

The Korea Credit Finance Association announced on June 9 that 52 member companies participating in the "Voluntary Debt Adjustment Agreement" provided debt relief to 8,335 financially vulnerable individuals, an increase of approximately 28% from the previous year’s 62.4 billion won.

The average debt reduction rate was 72.0%. Among these, the debt relief rate for deceased individuals was 98.4%, while those facing repayment difficulties had a relief rate of 66.0%.

By category, 2,055 debtors who lost their repayment ability due to accidents or illnesses received a total of 21.2 billion won, equivalent to 96.4% of their principal and interest. Additionally, 6,280 debtors experiencing economic hardships, such as income loss or unemployment, benefited from a total of 58.5 billion won in debt relief.

Since 2012, the Korea Credit Finance Association has operated the voluntary debt adjustment system in collaboration with its member companies. This program supports debtors who are unable to repay due to illness or accidents by providing repayment deferrals and principal and interest reductions. In cases of death, it alleviates the debt burden on heirs by waiving some or all debts. It also assists borrowers facing repayment difficulties due to unemployment or income reduction with repayment deferrals or debt adjustments.

Jung Sung-woong, chairman of the Korea Credit Finance Association, stated, "The lending industry has played a safety net role through voluntary debt adjustments to support the financially vulnerable and prevent them from being driven into illegal lending. It is essential to establish a legal and institutional foundation to activate a regulated lending system that the financially vulnerable can use with peace of mind."