Overdue debt to be erased

[Anchor]

This supplementary budget includes measures to forgive debts that small business owners are unable to repay.

Reporter Kim Ji-sook will provide more details.

[Report]

The delinquency rate for self-employed loans before COVID-19 in 2019 was 0.79%.

Last year, it more than doubled to 1.67%.

There are no signs of improvement this year either.

[Lim Gi-geun/Deputy Minister of Strategy and Finance: "Small business owners who barely overcame the shock of COVID-19 are now facing a decline in sales and are at risk of bankruptcy due to prolonged sluggish domestic demand."]

A budget of 1.4 trillion won will be invested to implement a 'three-part debt adjustment' plan.

First, the cancellation of long-term delinquent debts.

Debts of up to 50 million won that have been overdue for more than seven years will be forgiven.

The target includes 1.13 million individuals with a total of 16 trillion won in unpaid debts, and a new debt adjustment organization called 'Bad Bank' will be established to apply either '100% forgiveness' or 'up to 80% reduction' based on repayment ability.

[Kwon Dae-young/Secretary General of the Financial Services Commission: "We will support those individuals whose chances of recovery are around 1-2% in our system."]

For debts incurred during the COVID-19 period that are not overdue for seven years, the eligibility for the current New Start Fund will be expanded.

If a relief decision is made, the principal can be reduced by up to 90%, and the requirements will be relaxed for small business owners with median incomes below 60% who have been operating until this month.

[Lee Seung-geun/Restaurant Owner: "I took out a loan because it was tough, but if the government pays it back, I can work hard again and have hope."]

Concerns that repaying debts diligently leads to losses will also be taken into account.

Small business owners who have been repaying diligently will be allowed to make installment payments, and will receive a 1% interest rate support or a preferential interest rate of 2.7%.

This is the first time in eight years since 2017 that the government has intervened in personal debt adjustment with financial support.

KBS News, Kim Ji-sook.