As the number of victims of illegal private finance increased, the government created a debtor agent system to rescue them, but the performance was insignificant compared to the rush of applications. The number of debts to be supported doubled from the previous year, but the number of lawyers to support them decreased by seven from two years ago, and only 1% of the cases led to actual lawsuits.
According to the data submitted by the Financial Services Commission to the office of Lee In-young of the Democratic Party of Korea on the 22nd, 3,897 debts (962 debtors) applied for debtors by the end of June this year, exceeding the total number of cases (2,096 cases) last year.
However, the number of lawyers who will handle such debt relief applications decreased from 69 in 2023 to 61 last year, but only one more person increased to 62 this year. Even this is in charge of the task in the form of an adjunct, not a dedicated one.
The debtor agent system introduced in 2020 is to provide free legal services to victims of illegal collection by supporting lawyers. It is operated by the Financial Services Commission, but under the current law, only lawyers from the Korea Legal Aid Corporation can serve as debtors’ agents, so the practice is entrusted to the Korea Legal Aid Corporation. In addition to responding to illegal collection calls, the agent represents requests for return of loans exceeding the legal maximum interest rate (20% per year), compensation for illegal collection damages, and lawsuits to confirm the absence of debt.
In particular, 95% of applicants this year were victims of illegal private finance, and only 5% were damaged by institutional lenders. By type of damage, illegal bond collection accounted for the largest number of cases (77.9%), with 172 cases (5.7%) exceeding the maximum interest rate and 490 cases (16.3%) corresponding to both.
Although most of them are victims of illegal private finance, due to a lack of manpower at the site, agents often end up accepting illegal collection calls instead, and it has not led to active legal relief.
In fact, as of the end of June this year, 43 cases led to lawsuits, accounting for 1.1% of the total, and 0 cases were rescued last year and this year through pre-litigation adjustments. The number of cases requested by the police to investigate has not even been counted. There is also no follow-up management of whether the victims’ debts have been settled. The Financial Services Commission said, “We do not manage data on whether or not the debt is terminated.” The 1938 cases that ended at the end of last year and 2,648 cases that ended as of the end of June this year were cases that ended due to the expiration of the application period, which does not mean that the debt has been reduced or terminated.
The authorities and others say that just blocking illegal collection calls can ease the pain right away from the victim’s point of view, but illegal collection will be repeated if no actual debt adjustment is made within the support period. The period of support for the debtor agent system is 6 months, and it is possible to extend it for up to one year through one extension.
![Financial Services Commission. [Photo = Yonhap News]](https://i0.wp.com/wimg.mk.co.kr/news/cms/202507/22/news-p.v1.20250703.e596db28958a46dba97cfbe07e40fe96_P1.jpg?w=788&ssl=1)
At the time of the budget review in June, the Financial Services Commission asked for an increase in the budget, believing that the number of applications for debtors would reach 7,200 this year, and secured an additional 440 million won through the supplementary budget. However, the increased budget is not spent on recruiting agents. Although ruling party lawmakers pointed out that it is necessary to increase the number of agents during the budget review process, the Financial Services Commission reportedly said that the Legal Aid Corporation was under the Ministry of Justice, so it could not increase its manpower with the Financial Services Commission’s budget.
Critics point out that practical protection measures, such as guaranteeing legal response rights, should be taken at the same time as applications for debt relief have soared and budgets have expanded. The Financial Services Commission explained, “We recommend lawsuits, but victims are often reluctant because they are afraid of retaliation.” However, if the public system, which should be the last protective shield, falls short of practical relief, the victim has no choice but to turn to the private debt adjustment market.
Rep. Lee In-young said, “If we stay at the level of simply accepting collection calls instead as it is now, it is difficult to revive the purpose of the system, so it is necessary to supplement the system to lead to practical damage relief.” “Since the debtor agent system is the last device to protect vulnerable debtors, it is important to guarantee legal response rights,” he said. “We should consider ways to improve effectiveness, such as linking with police and financial authorities and maintaining a follow-up management system.”
