About 290,000 credit delinquents are about to be helped by the National Pension Service (NPS) and the Credit Counseling & Recovery Service. The Financial Services Commission (FSC), the nation's financial regulatory body, said credit insolvents will now be able to receive loans from the NPS to help repay their overdue loans to financial firms.!
Debtors, who have been able to pay pension contributions to the NPS, are eligible to receive funds from the NPS by applying to the credit counseling service from June 2 to October 31. Twenty-one nationwide offices of the counseling agency will be accepting applications. This means that debtors will be able to repay their loans with the money they contributed to the pension fund. They will be able to indirectly receive as much as 50 percent of their total payment.
However, insolvent debtors will need to pay back the money they received from the NPS.
"They can only pay interests within the first two years of getting the loans from the pension fund, and afterwards, pay the principal," said an official of the counseling agency. The NPS will set an interest rate of 3.4 percent a year. The agency will decide who will be eligible for the loans from the NPS. It will also lower interest rates of up to 50 percent on overdue loans, or completely erase overdue interest, based on debtors' credit history and repayment capability.
Those wishing to receive help from the NPS must agree to use the funds only to pay back to financial firms. If they are accepted, the NPS will send the funds to the agency, which will then repay loans to financial firms for credit delinquents. If a person repays their debts through the NPS and the counseling agency, and improves their finances, the regulatory body will delete their poor credit history. Such ratings are recorded at the Korea Federation of Banks.
Source: http://www.koreatimes.co.kr/www/news/nation/2008/05/123_24870.html