Amortization up to Eight Years

Starting from September, individuals will be able to amortize debts up to as long as eight years without legal actions such as provisional seizure if they are under a court-led individual workout procedure.

According to yesterday’s announcements of the Ministry of Finance and Economy and the Ministry of Justice, a bill to protect individual debtors suggested by 46 lawmakers, including Uri Party Rep. Chun Jung-bae, passed the National Assembly’s judiciary committee.

With the passage of the bill, salaried workers and the self-employed who have regular income can now apply for an individual workout procedure to a court. They will then be immune to legal actions such as compulsory execution by creditors, provisional seizure, and provisional disposition until the court makes a decision.

A court will appoint advisories to a debtor to help plan and act on a repayment schedule. When a debtor successfully completes the schedule, the remaining debt can be written off in some cases.

Those eligible are individuals with less than one billion won debt with security or those who have less than 500 million won debt without security.

The law will take effect from mid September, six months after the passage.

The 95-article bill is a part of an original bill, which was submitted by the government and composed of 652 clauses on bankruptcy in general. The passed bill stipulates revival procedures of individual debtors.

As the original bill on overall bankruptcy has not been reviewed effectively because of the document’s massive scale after it was submitted to the assembly in February 2003, lawmakers including Rep. Chun submitted the revised bill to the judiciary committee last September.

It is expected that considerable number of credit delinquents will be able to participate in normal economic activities with the help of a court-led workout procedure.

Chi-Young Shin higgledy@donga.com