OVERVIEW
The FSC unveiled details about the National Happiness Fund, which will be officially launched on March 29, 2013. The Fund aims to help credit recovery of delinquent borrowers and heavily-indebted low-income earners with programs including restructuring debt, easing debt servicing burden on student loans, and converting high-interest loans to lower-interest ones.
Those programs will need a total of KRW 1.5 trillion over the next 5 years. The Fund will initially raise KRW 800 billion through the KAMCO-controlled fund, loans and bond issuance. The remaining KRW 700 billion will be funded by the Fund’s proceeds and guarantee fees.
Financial institutions and non-bank lenders which sign an agreement for credit recovery assistance will be obliged to sell overdue loans to the Happiness Fund if their borrowers apply for debt restructuring.1
PROGRAMS TO BE FUNDED BY THE NATIONAL HAPPINESS FUND
1. Credit Recovery Assistance Program
Debt restructuring for overdue loans will be operated with two tracks:
(1) Debt restructuring by borrowers’ prior application
The fund will purchase overdue loans by prior application of debtors who borrowed from the enlisted financial institutions.
(2) Debt restructuring by borrowers’ later consent
|
|
Debt restructuring by borrowers’ prior application |
Debt restructuring by borrowers’ later consent |
|
eligible applicants |
Individuals who
borrowed less than 100 million won overdue for 6 months or longer as of end- February 20132 |
The fund first
proposes debt restructuring for “Individuals who borrowed less than 100
million won overdue for 6 months or longer as of end-February 2013” |
|
benefits |
①
Up to 50% of debt can be written off depending on the
applicant’s age, period of overdue payment, income ② Repayment schedule can be extended by up to 10
years |
Equivalent
benefits with debt restructuring by prior application. However, the rate of
debt write-off will be lower than debt restructuring by prior application. |
|
nullification of benefits |
If the applicant did not faithfully fulfill their debt restructuring
obligation, or hidden assets were
detected, all the benefits would be nullified. |
|
|
how to apply |
-Preliminary application: April 22~April 30 -Application: May
1~October 31 -
Branches of KAMCO, Credit Recovery
Foundation, Micro-credit centers -The Fund’s official website:
www.happyfund.or.kr |
The fund will
individually contact borrowers eligible for the program after July 2013 to
confirm their consent to debt restructuring. |
For overdue loans without borrowers’ application for debt restructuring, the fund can first purchase the loans from the enlisted financial institutions and then conduct debt restructuring by obtaining borrowers’ later consent.
2. Debt Restructuring for Student Loans
|
|
Debt restructuring by borrowers’ prior application |
Debt restructuring by borrowers’ later consent |
|
eligible applicants |
Individuals who
borrowed less than 100 million won overdue for 6 months or longer as of end- February 20132 |
The fund first
proposes debt restructuring for “Individuals who borrowed less than 100
million won overdue for 6 months or longer as of end-February 2013” |
|
benefits |
①
Up to 50% of debt can be written off depending on the
applicant’s age, period of overdue payment, income ② Repayment schedule can be extended by up to 10
years |
Equivalent
benefits with debt restructuring by prior application. However, the rate of
debt write-off will be lower than debt restructuring by prior application. |
|
nullification of benefits |
If the applicant did not faithfully fulfill their debt restructuring
obligation, or hidden assets were
detected, all the benefits would be nullified. |
|
|
how to apply |
-Preliminary application: April 22~April 30 -Application: May
1~October 31 -
Branches of KAMCO, Credit Recovery
Foundation, Micro-credit centers -The Fund’s official website:
www.happyfund.or.kr |
The fund will
individually contact borrowers eligible for the program after July 2013 to
confirm their consent to debt restructuring. |
3. Conversion of Outstanding Loans into Lower-interest Loans
|
eligible applicants |
- Individuals who borrowed loans at 20% or higher from financial
institutions or registered non-bank lenders; diligently repay their debt for the last
6 months or longer as of end-February 2013; and earn less than 40 million won
a year3 |
|
benefits |
-Outstanding
loans with 20% interest rate or higher can be converted to loans with lower-interest rates above
10%. For each borrower, up to 40 million of outstanding loans can be
converted. |
|
how to apply |
-application period: April 1~September 30 - branches of
KAMCO, Micro-credit centers, 16 commercial banks |
*Please read the attached file for details.