Korea Tightens Debt Relief Rules After Abuse Cases Found

1. What’s Happening

South Korea’s Financial Services Commission (FSC) announced tighter screening rules for the “Fresh Start Fund,” a debt relief program for small business owners. This follows an audit showing that some borrowers with strong repayment ability still received large debt reductions. The audit found nearly 2,000 people received about 84 billion won in improper debt relief. Some cases involved very high monthly income or large holdings of virtual assets like cryptocurrency. The FSC said it will improve checks and adjust debt reduction levels based on income and assets.

2. What It Means

Debt relief will become harder to access for high-income borrowers or those with hidden assets. Buyers and sellers in credit markets may see stricter lending and review standards going forward. Households with real financial stress may still get support, but unfair cases will be filtered out more carefully. This move aims to reduce moral hazard and restore trust in public support programs.

3. Watch Points

• Stricter income and asset checks: This will decide who qualifies for future debt relief.

• Crypto asset verification: Authorities may link with crypto platforms to detect hidden holdings.

• Legal changes: Proposed amendments to the Credit Information Act could expand data sharing.

Source

Im, S. J. (2025, December 16). Financial authorities to tighten screening after improper debt relief cases found. Yonhap News Agency.