Go to contents

[Editorial] Gov`t should Forestall Room for Misuse of Debt Rescue Program

[Editorial] Gov`t should Forestall Room for Misuse of Debt Rescue Program

Posted October. 30, 2002 22:49,   


In theory, it is desirable to give one more chance to rehabilitate to those who are on the verge of collapse. If they are wage earners or self-employed and are capable of servicing their debts, the government should provide them with an opportunity to work. To this effect, the government has brought forth a debt rescue program, under which the government would write off the remaining debts of individuals if they make sincere efforts to repay part of their debt within a five-year period. This program is necessary but the government should go conduct a thorough examination over the program so the program will not be misused or abused.

The debt rescue program is equivalent to the court receivership designed to help insolvent corporations. The program should function only for those who are willing to work and who can be rehabilitated. If the rescue program provides loopholes for heavily indebted people to have debts easily written off, then the program will never be successfully implemented. If the program gives people an impression that it is better to hang tough until they are bankrupt without paying off debts, the number of credit delinquents will rise instead of declining.

If the debt rescue program is abused, financial institutions are likely to retrieve capital and hesitate to make fresh loans, churning out credit delinquents. Even if creditors take up the issue with debtor`s repayment plan, the rescue program can be applied when the court gives a green light. But the government should not force creditors to bear sacrifice.

If the regulation is to succeed, the social perception about the bankrupt, among others, should be changed. Under the current law, those who are bankrupt find it very difficult to get a job. If the bankrupt cannot get a job even after the implementation of the debt rescue program, where can we find the raison d`etre for the program?

4Since the inauguration of the incumbent administration, personal borrowing and credit overdue payment have dramatically increased, bringing up the household debt to 30 million won and the number of credit delinquents to 2.5 million. If the debt rescue program is deemed as a measure to rescue all credit delinquents, people are scrambling to borrow money without any plan to repay the debts and file for the program. If the government is trying to rescue credit delinquents with votes in mind, that will indicate a departure from a reliable society.