Kwon Daeyoung: "Long-Term Debt Restructuring Is an Outstanding Task for Financial Advancement, Not Populism or State-Controlled Finance"

"If unpayable debts are left neglected, people drop out of economic activity... Supporting recovery is also part of credit"


Intentional and malicious delinquency strictly excluded... Debt restructuring voided if hidden assets are found

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Daeyoung Kwon, Deputy Chairman of the Financial Services Commission, stated on July 20 that the policy on long-term delinquent debt adjustment and relief "is not populism or state-controlled finance, but a financial advancement initiative addressing regulatory gaps that have gone unresolved for the past 20 years." The government plans to thoroughly screen out debtors who deliberately avoid repayment or conceal assets from receiving support. At the same time, it aims to reform the common practice among financial companies of selling or repeatedly extending the statute of limitations on overdue bonds after loans become delinquent.

Deputy Chairman Daeyong Kwon of the Financial Services Commission delivered a congratulatory speech at the '2026 Asia Financial Forum' hosted by The Asia Business Daily at the Chosun Hotel in Jung-gu, Seoul on May 21, 2026. Photo by Hyunmin Kim

On this day, Deputy Chairman Kwon appeared on "Fact Mill," a government policy explanation program held at the Blue House, and said, "Unpayable debts that have been left unattended for a long time should be adjusted, relieved, or forgiven, so that debtors can return to economic activity."

He emphasized that the cleanup of long-term delinquent debt is not a preferential policy that pays off debts on behalf of some debtors. He explained that if debtors who have lost their repayment capacity due to unavoidable reasons such as illness, unemployment, or COVID-19 are left out of the financial system for an extended period, it restricts their employment, consumption, and legitimate financial transactions, with the burden ultimately affecting the entire economy.

Deputy Chairman Kwon stated, "No one should lose their life or be pushed out of economic activity because of debts that are obviously impossible to repay," and continued, "When people cannot work or spend money, the damage does not end at the individual level; rather, it ultimately undermines our entire economy."

He added, "Some people might label these policies as populism or state-controlled finance, but I beg to differ," clarifying, "This is not about preferential treatment. It is about closing regulatory gaps that have existed for the last 20 years, lowering barriers, correcting misguided practices, and advancing the financial system."

The government plans to rigorously review applicants’ repayment ability and assets during the debt relief process, in order to prevent issues of fairness with those who made sincere repayments and concerns around moral hazard. Eligibility will be limited to small-amount debtors who have been delinquent for more than 7 years, whose income is at or below 60% of the median income, and who have no recoverable assets.

If a debtor has some assets or income but cannot fully repay the debt, instead of providing blanket debt relief, the debtor will be required to repay part of the principal, while the remainder will be adjusted through installment payments over the long term or interest reduction.

Deputy Chairman Kwon said, "We will precisely select and thoroughly screen those who are genuinely struggling, and will adjust or relieve their debts accordingly. Anyone found to have hidden assets will be excluded from support and must repay their debts in full."

In particular, the government is also considering measures to revoke support decisions if it is discovered that a debtor concealed assets after receiving debt adjustment. Deputy Chairman Kwon stressed, "If hidden assets are discovered later, we will nullify the debt adjustment itself. The government will manage the system thoroughly to prevent it from being maliciously exploited."

The government intends to utilize the Credit Information Act exception coming into effect this August to comprehensively verify property, such as income, land, and deposits, by coordinating data from the National Tax Service, Ministry of Land, Infrastructure and Transport, Ministry of the Interior and Safety, and Korea Financial Telecommunications & Clearings Institute. In the past, it was difficult to check information from various agencies at once without the debtor’s consent, but going forward, more rigorous evaluation of repayment ability will be possible, according to the Financial Services Commission.

Deputy Chairman Kwon also noted that in reality, there are not many cases where individuals intentionally avoid debt repayment for long periods. He pointed out, "If someone has money but hides their assets and chooses to live for years as a credit delinquent, they face significant limitations in areas such as credit card issuance, financial transactions, and employment. Realistically, how many people would deliberately endure these disadvantages to avoid repaying debt maliciously?"

He went on to say, "We should not neglect those who have no way of repaying debts just because of a tiny minority of deliberate or malicious individuals. While intentional delinquency should be strictly blocked, the real safety net is supporting genuinely struggling debtors."

The debt management practices of financial companies, in both lending and handling overdue credit, are also subject to reform. Deputy Chairman Kwon noted that, since financial institutions charge interest proportional to risk on the premise of loan screening and follow-up management, they must also bear some responsibility when delinquency occurs.

He stated, "The responsibility of financial companies does not end with lending money. If they agree to manage risk in exchange for interest, it is only reasonable that they also share responsibility when problems occur." He added, "While the relationship between financial companies and customers may appear equal at the time of lending, if delinquency happens, it can become highly one-sided. We will address the practices of selling overdue bonds, harsh collections, and repeatedly extending statutes of limitations to pursue collection for 10 or 20 years."

Financial authorities also plan to promote 'self-initiated debt adjustment,' where financial companies directly adjust the repayment terms in consideration of the debtor's income and circumstances before debts become long-term delinquencies. The aim is to help debtors bounce back early through principal repayment deferral, long-term installments, and interest reduction, even if they do not go to court or enter public debt relief programs.

Deputy Chairman Kwon stated, "Lending as much as possible is not the solution. Healthy credit order means lending amounts that can be repaid, and borrowers repaying without delinquency. In cases where repayment is truly impossible, a balanced financial system requires a thorough and reasonable screening and adjustment of assets and income."

He emphasized, "Understanding credit solely as 'all borrowed money must be repaid' is too narrow. The broader concept of credit includes the social responsibility to wait for and help those in difficulty until they can get back on their feet."

This content was produced with the assistance of AI translation services.