Faster relief for vulnerable debtors and financial fraud victims
The Credit Counseling and Recovery Service is teaming up with the Korean Association of Certified Judicial Scriveners on Wednesday. The partnership aims to prevent harm to debt-adjustment users and bolster legal support for vulnerable debtors. The move comes as slowing economic growth and high interest rates drive up demand for debt adjustment. The two organizations aim to narrow information gaps and ease the cost burden on borrowers.
The service signed an MOU titled "Building a Cooperative System for Protecting Debt-Adjustment Users and Providing Legal Support to Vulnerable Debtors" with the association at the association's headquarters on Tuesday.
Under the agreement, the two organizations will work together to improve legal access for financially vulnerable groups, including at-risk debtors and victims of financial fraud, and to support swift relief for those affected.
The partnership aims to prevent consumer harm caused by some law firms' false or exaggerated advertising, excessive fee demands and deliberate delays in handling cases. It is also meant to foster a sound environment for debt-adjustment services.
Debt adjustment through the service allows debtors to consult and apply directly, whereas individual rehabilitation and bankruptcy are legal remedies that go through the courts. The two tracks differ in the debts covered, eligibility requirements, costs and legal effects.
The two organizations will accordingly provide accurate guidance on the differences between the service's debt-adjustment program and court-based legal remedies such as individual rehabilitation and bankruptcy. This will help debtors choose the option best suited to their income, assets and debt situation.
"We will work closely with the Credit Counseling and Recovery Service so that debt-adjustment users do not suffer unnecessary harm and can accurately choose the program that fits their circumstances," said Lee Kang-cheon, president of the Korean Association of Certified Judicial Scriveners.
Kim Eun-kyung, who heads both the Credit Counseling and Recovery Service and the Korea Inclusive Finance Agency, said, "We will strengthen protections for debt-adjustment users so that debtors do not bear unnecessary costs from misunderstanding the system," adding, "We will also do our best to close gaps in legal services for vulnerable groups."
Anyone exposed to illegal private lending can report the case to the Financial Supervisory Service (1332) for assistance, and those struggling with excessive debt can seek help from the Korea Inclusive Finance Agency (1397) or the Credit Counseling and Recovery Service (1600-5500). Note: Loan contracts carrying an annual interest rate above 60 percent are void as to both principal and interest.
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