Credit recovery chief says vulnerable borrowers need debt relief first

A research group has been officially launched to lead the discourse on "financial basic rights" — the principle that all citizens should be guaranteed minimum access to financial services.

Kim Eun-kyung, chairwoman of the Credit Counseling and Recovery Service and president of the Korea Inclusive Finance Agency, said Thursday at the launch ceremony at the National Assembly Library that "finance is an essential part of daily life" and must be recognized "not as a form of charitable protection, but as a universal right that all citizens are entitled to enjoy."

At the event, Kim presented findings from a survey on economic burdens conducted among users of the illegal private lending prevention loan program and a control group of non-users, offering concrete evidence for the need to protect vulnerable borrowers. According to the Korea Inclusive Finance Agency survey, users of the program said they spend 60 percent of their monthly expenditure on loan repayments — far exceeding the 15.03 percent reported by the control group. The share of users who experienced a delinquency in the past year reached 79.7 percent, well above the 17 percent recorded in the control group.

Users' willingness to use debt restructuring services scored 3.88 out of 5 — the highest among eight support services surveyed — indicating that they prefer settling existing debt over taking out additional loans. Based on these findings, Kim said she would codify a "debt restructuring before lending" principle in future legislation.

The research group defined financial basic rights as "the right of all citizens to access financial services — an essential infrastructure of modern society — without discrimination, and to use the minimum funds needed to live a dignified life under fair conditions."

Kim said current laws such as the Microfinance Act and the Individual Debtor Protection Act "fall short in that they remain rooted in the concept of charitable support," and outlined plans to "give concrete legal form to the abstract rights embedded in the Constitution through the enactment of a Basic Financial Security Act for Citizens."