From BigGo Finance · BigGo Finance · · 1m 30s
South Korea Limits Debt Collection Extensions
South Korea's new debt rules end endless collection attempts for small loans.
In brief
South Korea's new debt rules end endless collection attempts for small loans. South Korea's financial rules now require debt collectors to complete statute of limitations for small loans or relinquish claims, ending repeated collection efforts. Originally reported by BigGo Finance.
New Debt Rules Effective Oct 12
South Korea's Financial Services Commission and Financial Supervisory Service will implement revised rules on financial institution write-off recognition starting October 12.
Loan Write-Off Rules Apply to Small Debts
Financial companies seeking write-off recognition for individual unsecured delinquent loans must complete the statute of limitations on the initially stated expiration date or relinquish the claim.
Loan Thresholds for New Rules
The rules apply to loans of ₩50 million (approximately $37,000) or less at banks and insurers, and ₩30 million (approximately $22,000) or less at savings banks and specialized credit finance companies.
Extensions Only Under Exceptions
Extensions are permitted only under exceptions such as discovery of hidden assets, bankruptcy or rehabilitation proceedings, or fulfillment of debt restructuring agreements.
Obligation Carries Over When Claims Are Sold
Even if a claim that received conditional write-off recognition is sold to another company, the obligation to complete the statute of limitations remains.
Re-Examination System Introduced
A re-examination procedure will require reassessment of the debtor's repayment capacity three years after any extension, with relinquishment of the claim if repayment is deemed unlikely.
Rules Apply from Q4 2026
The new rules apply to financial companies' write-off applications from the fourth quarter of 2026.
The main idea
South Korea's financial rules now require debt collectors to complete statute of limitations for small loans or relinquish claims, ending repeated collection efforts.
