Illegal Private Loan Victims to Be Managed as Welfare Crisis Households

The Ministry of Health and Welfare (Minister Jung Eun-kyung) announced on the 22nd that it will strengthen the discovery and support of welfare crisis households by linking financial crisis information—including victims of illegal private loans, vulnerable debtors, and those whose debt adjustment has been terminated—to the welfare blind spot identification system for relief.

On the same day, a partial amendment to the enforcement decree of the 'Act on the Use and Provision of Social Security Benefits and the Discovery of Benefit Recipients (hereinafter, the "Social Security Benefits Act")' embodying these measures was approved at a State Council meeting.

The government is working to ensure there are no cases where livelihoods are threatened by debt, with the goal of being "a government that saves the lives of its people." The Ministry of Health and Welfare has accordingly prepared related measures in close consultation with the Financial Services Commission, the Financial Supervisory Service, the Korea Inclusive Finance Agency, and others.

The key provisions of the partial amendment to the 'Social Security Benefits Act Enforcement Decree' include adding victim information from illegal private lenders and illegal private loan brokers to the welfare blind spot identification system as crisis information. Specifically, the plan is to collect information on those who reported to the Financial Supervisory Service's Illegal Private Loan Damage Reporting Center as one type of crisis information, thereby proactively identifying financial crisis households and linking them to welfare services.

Additionally, the amendment adds information on vulnerable debtors with low income and credit levels among users of policy microfinance (illegal private loan prevention loans, Sunshine Loan special guarantees) to crisis information. Previously, only applicants whose policy microfinance applications were rejected were identified; however, going forward, the scope of discovery will expand to include vulnerable debtors with anticipated economic difficulties among those whose applications were approved, and necessary welfare services will be provided.

The amendment also adds information on individual debtors whose debt adjustment effect has been lost due to failure to comply with debt adjustment repayment plans. Until now, only debtors in long-term arrears of 90 days or more whose debt adjustment plan became ineffective due to non-compliance were identified; however, going forward, the scope will expand to include debtors with anticipated payment risks or those in short-term arrears of less than 90 days whose adjustment plans became ineffective, allowing for early identification of financial crisis households.

Finally, information on households showing abnormal signs such as changes in water usage is being added to crisis information. While information on households in water supply cutoff situations has been utilized, the plan going forward includes identifying households with anomalies in water consumption patterns and proactively identifying those facing difficult living conditions to provide appropriate welfare services.

First Vice Minister Hyun Su-yeop stated, "Debt collection calls inflict extreme suffering that goes beyond economic damage, destroying a person's life and well-being, and those whose debt adjustment by the Credit Recovery Committee has even ceased face the most acute crisis, immediately exposed to debt collection again. The significance of this enforcement decree amendment lies in establishing a legal framework to identify and assist such financial crisis households without blind spots," he added.