2 million people suffer from joint surety trap

Jeong Gyu-hoon, who was a director of an electric facilities firm, had to live apart from his family for more than 10 years because of the joint surety he stood in 1998. As the main debtor failed to pay loans, the creditor began pressuring him. His wife left the house to earn money, and his son and daughter were sent to his parents. The family finally got together in 2009 at a small rental home, but is still suffering from debt.

People started to apply for "People`s Happiness Fund," a major pledge of President Park Geun-hye that buys debts from heavily-indebted individuals and implements credit recovery programs for them. However, debtors who stood joint surety are feeling a relative deprivation because they can`t benefit from the program.

According to the Korea Federation of Banks on Wednesday, the number of people who took loans from non-bank financial institutions and those who stood joint surety stands at about 1.97 million people. Guarantees by joint surety in the non-banking sector have reached 75 trillion won (67.1 U.S. billion dollars), accounting for 14 percent of total non-banking sector loans and guarantees of 551 trillion won (493 billion dollars). There are many other financial programs supporting low-income people in addition to the happiness fund, but surety obligators are excluded from the beneficiary list.

The Dong-A Ilbo conducted an in-depth interview of 31 people who had stood joint surety to examine their difficulties. Jeong is one of the interviewees.

The government abolished joint surety in the banking sector last year, and is proceeding to do the same in the non-banking sector. If new joint surety is abolished while existing joint surety cases are excluded from debt restructuring, as was the case with the banking sector, some 1.97 million people cannot benefit.

Han Sang-wook, who was mired in debt by standing joint surety for 16 years, said, "It is absurd to rescue people who are in debt due to their faults, while ignoring those suffering from joint surety due to others` fault. I hope the government paves a way for people like us to get back on our feet."

"There are not many countries that have joint surety system," financial industry experts said. "New joint surety should be abolished while plans to rescue people suffering from extreme difficulties because of joint surety they made in the past should be devised."

hanwshin@donga.com