8,200 Consultation Cases for Personal Workout

As the number of delinquent customers has largely increased, there is a sudden increase in the number of a personal workout consultation. However, because of complicated application procedure, there are few actual applications.

According to the credit recovery supporting committee on December 2, there have been 94 applicants of personal workout since the first application on November 1.

Last month, the consultation applications were 8201 cases increased by 50% over October (5389 cases); 1,800 cases by internet, 5280 cases by phone and 1121 cases by visits. However, the records of application were insufficient.

In a cyber room of civil affairs(www.pcrs.or.kr) opened by the credit recovery supporting committee, many customers asked “Can I pay my debts gradually for a long time” or “I wore myself out paying only interest with monthly income of 1 million won.

Because of complicated application procedure and unconcern of financial institutions, the number of actual applications is small.

To apply for the personal workout, delinquent customer must visit the financial institutes where they received loans and receive the approval application form for credit recovery supporting, application form of debtor, certificate of debts and the letter of qualification confirmation. Then, they must submit a variety of documents which can prove substances of application forms to the credit recovery supporting committee.

There are insufficient windows of financial institutions for the consultation of personal workout.

Kookmin Bank with 1200 branches has just 20 consultation windows for delinquent customers all over the country. LG Card and Shinhan Card have only 13 windows and 1 window respectively.

Another reason is that there are few applicants who have satisfied application conditions. As the qualified customers of personal workout, customers must have debts of less 50 million in over three financial institutions, have over one year registered as the delinquent customer and have incomes of over the minimum living expenses (990,000 won for 4 persons). Also, debts of one financial institution must not be larger than 70% of all debts.

One of problems is the lacking staff of credit recovery supporting committee. For the consultation of personal workout, there are 10 telephone liens (02-6362-2000). 10 consultants have performed the daily average 300 phone consultations.

Besides, According to the financial supervisory service (FSS) and the Korea Federation of Banks (KFB), 65,000 (90%) out of delinquent customers which have increased by over monthly 70,00 people on average since August became the delinquent customers by using the credit card excessively.

Dong-Won Kim Chi-Young Shin daviskim@donga.com higgledy@donga.com