Troubled debtors to sign up for gov't-led rescue fund

SEOUL, April 22 (Yonhap) -- Thousands of heavy debtors in South Korea are expected to line up in a long queue on Monday as the government begins to take preliminary applications for the state debt relief fund proposed by President Park Geun-hye as part of an effort to help ease financial burdens of the underprivileged. The National Happiness Fund, officially launched last month, will start receiving preliminary applications from heavy debtors starting on Monday till next Tuesday, according to the state-run debt clearer Korea Asset Management Co. (KAMCO), in charge of managing the relief fund and the Financial Services Commission (FSC), the country's top financial regulator. The preliminary application is for KAMCO to gather information on the status of an applicant's liabilities, with the actual evaluation for approval on debt restructuring to take place from May till the end of October, the FSC said. Submission of a preliminary application immediately halts debt collection by creditors from the applicant, which will likely attract a lot of heavy borrowers to come and sign up for the fund, KAMCO said. The fund debuted with an initial size of 1.5 trillion won (US$1.33 billion) in March, upon the envisioned plan by the president for the government to buy overdue debts from local banks and other non-bank institutions to help the debt-mired and underprivileged get back on their feet. After months of planning, the FSC drew up the final framework in which KAMCO, assigned by the government to run the debt relief fund, will buy soured debts that are worth less than a combined 100 million won and are at least six months in delinquency with their principal repayment as of February 2012. When approved, half of the debts held by a borrower will be written off, with the remainder to be paid within the next 10 years. The portion of the debts to be written off is larger for the low-income group. Almost every financial firm in Korea, or more than 4,000 players, excluding some smaller money lenders, have signed an agreement with the government to offer a debt workout program through the happiness fund, according to the FSC. elly@yna.co.kr (END)