“₩7.4 million of a ₩10 million debt forgiven” ... Saechulbal Fund helps the self-employed as intentional delinquencies also rise

[Financial News] The average debt write-off for participants in Saechulbal Fund, a debt-restructuring program for small business owners and the self-employed, was found to amount to 74% of principal. That means someone with 10 million won in debt would have 7.4 million won forgiven. The fund has been operating since 2022 to help small business owners hit by the COVID-19 pandemic get back on their feet.
According to data on Saechulbal Fund’s purchase-based debt-restructuring agreements that the office of People Power Party lawmaker Park Jun-tae, a member of the National Assembly’s Political Affairs Committee, received from the Korea Asset Management Corporation (KAMCO) on the 11th, the average reduction rate stood at 74% as of the end of August.
The average principal owed per borrower was 91.5 million won, and the average principal reduction at the time of signing an agreement was 67.7 million won. The average delinquency period from the first missed payment to the signing of an agreement was about 10.9 months, with average interest accrued during that period estimated at about 10.3 million won. In other words, the average reduction was 6.6 times the interest burden resulting from delinquency.
Saechulbal Fund is designed to grant principal reductions only after a borrower has been delinquent for more than 90 days. Concerns have repeatedly been raised that this structure could encourage intentional delinquency and disadvantage borrowers who repay diligently. KAMCO says the number of people under review for intentional delinquency is also on the rise. The number stood at 92 in 2023, 196 in 2024, 339 in 2025 and 362 as of August this year. A KAMCO official said, “Principal reductions are made on portions of debt that borrowers cannot repay when they have no means to pay interest,” adding, “Saechulbal Fund is intended to reduce the debts of self-employed people and small business owners and help them get back on their feet, so we apply debt restructuring more broadly than in ordinary cases.” KAMCO said, however, that it had tightened its screening approach starting this year to prevent intentional delinquency.
Saechulbal Fund was introduced in 2022 under the Yoon Suk Yeol government as a “bad bank” concept—purchasing nonperforming loans—to help self-employed people hit by COVID-19. The program was also expanded under the Lee Jae-myung government. Last year, 700 billion won was added through the second supplementary budget, and eligibility was expanded from people who operated businesses between April 2020 and November 2024 to those who continued operating through June 2025. For low-income delinquent borrowers with total debts of 100 million won or less, the maximum principal reduction rate was raised from 80% to 90%, and the maximum repayment period was extended from 10 years to 20. Critics say that, alongside broader eligibility and greater debt-relief benefits, screening for intentional delinquency, asset checks before agreements, and systems to detect and recover hidden assets after agreements should also be strengthened.
[email protected] Jo Eun-hyo Reporter