The Financial Services Commission (FSC) on the 16th said it plans to tighten screening criteria so that cases with excessively high actual income are excluded from eligibility for the Fresh Start Fund, reflecting a Board of Audit and Inspection finding that resources from the Korea Asset Management Corporation (KAMCO)'s Fresh Start Fund were used to write off debt for a high earner making 80 million won a month.
Regarding cases where people concealed virtual assets to receive debt relief, the Financial Services Commission (FSC) said it is discussing a plan to verify whether applicants for the Fresh Start Fund hold virtual assets in connection with virtual asset service providers, and said it will take steps so that this can be reflected in applicants' asset reviews going forward.
The Financial Services Commission (FSC) explained it was criticized by the Board of Audit and Inspection because it selected Fresh Start Fund beneficiaries based on net debt. It said it considered relative income and assets compared to the size of liabilities, rather than absolute income and assets. The principal reduction rate was uniformly set at 60% regardless of income.
The Financial Services Commission (FSC) said that in the case of the self-employed, it took into account that the scale of liabilities was large and that income had plunged due to business restrictions, and explained that in the midst of sales fluctuating in real time during COVID-19, it also considered it inappropriate to assess repayment capacity based on reported income for the year immediately prior to application.
The Financial Services Commission (FSC) said that under current law it is difficult to accurately determine whether applicants hold virtual assets and their scale using the government's administrative information-sharing network and credit rating agency data used to select Fresh Start Fund beneficiaries. The Financial Services Commission (FSC) said it is pushing to amend the Credit Information Act so that, for financial assets and virtual assets, it can receive information in bulk from financial companies.
According to the regular audit results of the Korea Asset Management Corporation (KAMCO) released by the Board of Audit and Inspection the previous day, 1,944 out of 32,703 people who received principal reductions had a repayment capability ratio of 100% or higher, yet had a total of 84 billion won in debt written off. A person identified as A, age 50, had a monthly income of 80.84 million won with a debt repayment capability ratio reaching 1,239%, but received a reduction of 200 million won out of 330 million won in debt. A person identified as B, who held 430 million won in virtual assets as of last year, also had 120 million won in debt reduced in the same year.