Self-employed people and small businesses who have suffered major economic disruptions due to the pandemic will receive government support in writing off their debts as long as they pass a thorough screening process, the Financial Services Commission said Thursday.
The plan -- revealed earlier to help the group repay loans they had taken out since the pandemic -- aims to reduce their debts, which the agency says needs to happen now because they could soon go bankrupt. But critics have said too much help is unfair to other Koreans who have been left out from such assistance.
“The regular relief program has its limits and we just can’t let those struggling with meeting the repayment period go broke,” a senior official at the top financial regulator said, at a meeting that brought together other agencies and state-run companies called to back the latest plan.
A thorough screening process will sort out the right candidates, the official noted, saying the agency will run a check on wealth held by applicants.
According to the agency, help will be given once and it will affect credit ratings. Those who have collateral loans or loans taken out for less than six months at the time the program takes effect will not be qualified. The agency plans to cut debt levels by up to 80 percent, excluding interest.
The program is expected to take off in late September.