Victims of illegal private lending can now apply for relief online, starting Monday

Victims of illegal private lending will no longer need to visit a support center in person to seek relief — they can now apply online. Once an application is submitted, a dedicated caseworker will be assigned to guide the victim through the appropriate steps, from halting illegal debt collection to resolving debts and obtaining legal assistance.

The Financial Services Commission announced Saturday that it will begin accepting online applications for its one-stop comprehensive support program for illegal private lending victims starting Monday, through the Credit Counseling and Recovery Service's website and mobile app.

Until now, anyone seeking to use the service had to visit one of 22 integrated financial support centers for low-income households across the country in person. Going forward, applications will be accepted online not only on weekdays but also on evenings and weekends. Applicants can log in through the Credit Counseling and Recovery Service's digital counseling portal or mobile app, verify their identity, and enter information about the illegal lender and the amount of damage suffered.

After an application is submitted, a dedicated caseworker from the Credit Counseling and Recovery Service will follow up by phone or text message to help the victim complete a damage report. The caseworker will then demand that the illegal lender stop collection activity and close out the debt, and will assist with follow-up steps as needed — including appointing a debt-defense attorney, referring the case to police for investigation, or arranging debt restructuring. All consultations and support are provided free of charge.

From Feb. 23 through Oct. 31, a total of 1,239 victims received counseling through the one-stop support program. Of those, 987 reported a combined 7,231 illegal debts — an average of 7.3 debts per victim.

Caseworkers demanded that collection activity be halted and debts closed on 5,469 illegal debt cases, reaching settlement agreements on 776 of them. Debt-defense attorneys were appointed through the Korea Legal Aid Corporation in 2,623 cases, and 192 certificates of nullity were issued for antisocial lending contracts.

Financial authorities also plan to actively inform victims of their legal rights. Under an amended moneylending act that took effect July 22 last year, contracts involving annual interest rates above 60 percent, sexual exploitation in debt collection, or assault and intimidation are deemed antisocial lending contracts, rendering both the principal and interest void. Even contracts with illegal lenders charging 60 percent or less annually may have their interest terms voided.

Victims can use a certificate of nullity issued by the Financial Supervisory Service to refuse repayment, demand that collection activity stop, or seek the return of money already paid. The Financial Supervisory Service plans to station police officers at the Credit Counseling and Recovery Service starting in December to allow criminal referrals to be made at the counseling stage.

Victims who find the online application process difficult or need additional guidance can contact the Credit Counseling and Recovery Service's call center for assistance.

Meanwhile, the Supreme Court's Sentencing Commission is also pushing to toughen penalties for illegal private lending crimes. On Nov. 6, the commission reviewed a proposed revision to sentencing guidelines that would raise the basic recommended sentence for illegal private lending to between 10 months and two years and six months in prison, with an aggravated range of one year and six months to five years. Cases in which illegal debt collection causes serious harm to victims would also be added as a special aggravating factor.