Reason for proposal and main contents

The current personal debt restructuring system is divided into public remedies led by the court, such as rehabilitation and bankruptcy, and private remedies led by the Credit Recovery Committee, such as personal workouts. Unlike public remedies, which are court-led and have the effect of a court's judgment, the credit restoration procedure is based on a credit recovery support agreement. 

However, the current law limits the beneficiaries of the agreement to borrowers from commercial financial service institutions and policy-based financial institutions only. Therefore, it is actually difficult if not impossible to adjust borrowings from non-financial service institutions, such as student loans from the Korea Scholarship Foundation, phone bills, health insurance premium bills, and utility bills, even though they have a close impact on the livelihood of the actual debtors.

Therefore, the proposed amendment aims to enhance the overall effectiveness of the personal debt restructuring system by laying an institutional foundation for readjusting the non-financial institution debts of individual debtors by including the Korea Scholarship Foundation, phone companies, telecommunication billing service providers, the National Health Insurance Service, and utility companies in the targets of credit recovery support agreements (Article 75 (2) of the draft).