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The Korean government is moving to help delinquent borrowers who have fallen behind on their
debt payments.
There are an estimated three million Koreans drowning in debt that could benefit from the
government's new multi-million dollar fund.
Ji Myung-kil has more.
The People's Happiness Fund has been set up to ease the financial burden on debt-ridden
households.
And thousands of Koreans are lining up for help.
"I kept getting phone calls from companies pressuring me to pay off my debts. It's hard
to handle the situation."
The fund, which will start with around 800 million U.S. dollars, will support people
who failed to service their debt for more than six months before August last year.
With a discount interest rate of four to eight percent, the fund will buy from local financial
companies overdue debts that are worth less than a combined 100 million won or some 92-thousand
U.S. dollars.
However, experts worry the fund will encourage people to take on bigger loans without much
thought on how to pay them back.
They have also raised some moral concerns.
"It seems debtors are only interested in getting their debt burden reduced instead of spending
time to pay off the debts they owe."
The Credit Counseling and Recovery Service, which is taking applications for the fund,
says delinquent borrowers need to take precautions when rescheduling their debts through this
funding program.
"If you fail to pay interest payment for three straight months, you will lose the benefits
of the program."
The Financial Services Commission plans to prevent moral risks by fining debtors who
do not proceed with the proper repayment procedures.
Ji Myung-kil, Arirang News.