16 borrowers who hid assets to get debt relief lose W1b in write-offs

Sixteen borrowers who concealed assets to obtain principal reductions under the Fresh Start Fund have been identified, with the forgiveness of more than 1 billion won ($746,000) in debt now revoked.

According to data submitted to People Power Party lawmaker Park Sung-hoon of the National Assembly's Political Affairs Committee by the Korea Asset Management Corp., or Kamco, 16 borrowers have had their agreements canceled since the Fresh Start Fund launched through the end of August, after investigations confirmed they had hidden assets.

The borrowers' combined principal totaled 1.65 billion won, of which 1.06 billion won had been written off. Real estate was the most commonly concealed asset, with 11 borrowers found to have hidden property. Two others had concealed land compensation payments, while one each had hidden lease deposits, movable property, and real estate.

Kamco has completed the cancellation of agreements for all 16 borrowers and is currently pursuing asset preservation measures, including provisional seizures, as well as legal proceedings for compulsory enforcement.

The Fresh Start Fund had previously cross-checked borrowers' self-reported asset disclosures against a limited set of financial data available from relevant agencies.

However, an amendment to the Credit Information Act that took effect Aug. 13 established a legal framework allowing authorities to access a broader range of asset information that had previously been difficult to verify, including gifts, virtual assets and unlisted shares.

With cases of debt restructuring obtained through asset concealment now coming to light, calls are growing for a stronger post-approval verification system. The government has recently been emphasizing inclusive finance as a means of helping financially vulnerable borrowers get back on their feet.

"The debt restructuring system exists to help small business owners who are genuinely struggling — it must not become a channel that benefits those who have hidden their assets," Park said. "The government must thoroughly recover funds from borrowers who concealed assets and review the entire process, from the initial debt restructuring screening to post-approval verification."