The current Act prohibits debt collectors from making direct contact with the debtor where the debtor has appointed an attorney-at-law, etc., as an agent. However, the current scope of ‘debt collector’ does not include credit financial institutions or credit information companies, failing to protect the rights of the debtor.

On another side, the Act allows the debt collector to demand the debtor to pay a debt even while debt mediation is being processed by a dispute mediation committee pursuant to the Act on Registration of Credit Business, etc., and Protection of Finance Users, Framework Act on Consumers and Act on the Establishment, etc., of the Financial Services Commission. Therefore, there is a need to strengthen debtor protection so that he/she may participate in the dispute mediation process in a stable manner by limiting such demands from being made.

Additionally, while debtors are lifted of their obligation to pay for claims that have lapsed by prescription, some debt collectors are exploiting situations where the debtor is not aware of the completion of extinctive prescription of a claim, and are making indiscreet demands to pay debts. Therefore, a systematic mechanism is required to prevent illegal/expedient debt collection from the source.

This proposal also seeks to create a fair debt collection culture by suspending debt collection for a certain period if the debtor is undergoing rehabilitation procedure or is suffering from a disaster or a disease and it is therefore difficult to pay back the debt.

Details

A. Prohibit all debt collectors from making direct contact with the debtor where the debtor has appointed an agent (Article 8-2)

B. For claims that are undergoing dispute mediation, prohibit demands to pay a debt until the mediation process is complete; impose an administrative fine of up to ten million won for a violation (newly insert Article 8-5; Article 17, paragraph 2, subparagraph 4-2)

C. Prohibit any debt collector to assign or acquire a void/non-existing or lapsed claim for the purposes of debt collection; where such was contravened intentionally or due to gross negligence, impose punishment of imprisonment of up to one year or a fine of up to ten thousand won (newly insert Article 11, paragraph 2 and Article 15, paragraph 3, subparagraph 3)

D. Prohibit seizure of living expenses as declared by Financial Services Commission (newly insert Article 14-2)

E. If the debtor is undergoing rehabilitation procedure or is suffering from a disaster or a disease and such situation significantly decreases his/her ability to pay back the debt, require a suspension of debt collection within a range of six months, and impose an administrative fine of up to ten million won if violated (newly insert Article 13-3, Article 17, paragraph 2, subparagraph 8/9)

Note

This proposal presumes the passage of the Partial Amendment to the ACT ON REGISTRATION OF CREDIT BUSINESS, ETC. AND PROTECTION OF FINANCE USERS (Proposal No. 16923) as introduced by National Assembly Member Kim, Seong-won. Therefore, if said Amendment proposal does not pass or passes in an amended form, adjustments must be made accordingly.

Prohibit all debt collectors from making direct contact with the debtor where the debtor has appointed an agent (Article 8-2)

For claims that are undergoing dispute mediation, prohibit demands to pay a debt until the mediation process is complete; and impose an administrative fine of up to ten million won for a violation (newly insert Article 8-5; Article 17, paragraph 2, subparagraph 4-2)

Prohibit any debt collector to assign or acquire a void/non-existing or lapsed claim for the purposes of debt collection; where such was contravened intentionally or due to gross negligence, impose punishment of imprisonment of up to one year or a fine of up to ten thousand won (newly insert Article 11, paragraph 2 and Article 15, paragraph 3, subparagraph 3)

If the debtor is undergoing a rehabilitation procedure or is suffering from a disaster or a disease that significantly decreases his/her ability to pay back the debt, require a suspension of debt collection within a range of six months, and impose an administrative fine of up to ten million won if violated (newly insert Article 13-3, Article 17, paragraph 2, subparagraph 8/9)