Law Takes Aim at Creditor Harassment

A special law that calls for criminal prosecution when creditors or collection agencies harass guarantors unreasonably is in the works, according to a Ministry of Justice statement yesterday.

The law will also call for landlords who cannot give deposit money back to leaseholders for failing to take new tenants after the end of housing lease period to return it through insurance.

The Ministry of Justice said the law would increase the government’s ability to protect the weak based on the above statement.

According to the plan, if a collection agent unreasonably presses a guarantor to pay debt by making phone calls to the debtor all day and night, or by harassing the debtor’s workplace, the collection agent will be punished.

Unreasonable collection methods are currently punishable using suspicion of threat and defamation of character statutes, but more specific regulations will be stipulated in the tentatively named: “Special Law for Debtor Protection.”

A Ministry of Justice official said, “When debtors fail to pay their debts, some creditors go to unreasonable means to collect. The new debtor protection law is a strong signal that such behavior will be punished, and is a warning to creditors.”

Together with relevant government ministries such as the Ministry of Finance and Economy, the Ministry of Justice will also prepare a plan in which consumers can easily cancel or return unwanted purchases.

A plan to force monetary institutions to notify debtors of their present debt status will also be promoted.

Jin-Kyun Kil leon@donga.com