"Am I a Sucker for Working Three Jobs?"…Government's 'Debt Forgiveness' Initiative for 1.13 Million People Sparks Pros and Cons Debate (Targets, Application Method?)
"I'm working three jobs to pay off debt, even cutting my kids' academy classes. Am I a sucker just for diligently paying it back?"
The Lee Jae-myung administration's announcement to promote a large-scale 'debt adjustment program' that **forgives approximately ₩16.4 trillion in debt for 1.13 million people** has ignited a fierce online debate. The positive intention of 'a policy that saves people by giving a chance to those unable to repay' is clashing sharply with criticisms of 'a policy that discourages diligent repayers and induces moral hazard'. We have perfectly summarized who is targeted by this controversial 'debt forgiveness' policy, how it will proceed, and the core arguments of both sides.
1. Policy Content: Who, What Debt, How Much is Forgiven?
This debt adjustment program is largely divided into two tracks: **'Individuals'** and **'Small Business Owners'**.
① Individual Debt Adjustment Program
- Target: Approximately 1.13 million individuals with unsecured debt of **₩50 million or less** that has been overdue for **7 years or more**.
- Method: A 'Bad Bank' (debt adjustment agency) established with government funds will collectively purchase and adjust these non-performing loans.
- Forgiveness Level:
- Complete Forgiveness (Debt Write-off): In cases where repayment ability is deemed completely absent (e.g., below 60% of median income).
- Up to 80% Principal Reduction: If repayment ability is significantly insufficient, up to 80% of the principal will be reduced, and the remainder will be repaid in installments over 10 years.
② Small Business Owners' 'New Start Fund'
- Target: Approximately 101,000 low-income small business owners with total debt of ₩100 million or less and below 60% of median income.
- Forgiveness Level: **Up to 90% of the overdue principal** will be forgiven.
2. How to Apply? (Expected Procedure)
This policy is **scheduled to be implemented starting next year**, and specific application methods have not yet been announced. However, based on past similar cases, it is likely to proceed as follows.
- Official Agency Application: Apply through the official online sites of the Korea Asset Management Corporation (KAMCO) or the 'New Start Fund'.
- Eligibility Screening: Submit income and asset-related documents for repayment ability screening.
- Debt Adjustment Confirmation: Based on the screening results, debt forgiveness or principal reduction and installment repayment plans will be confirmed.
3. Proponents: "A Policy for Human Recovery, Not Financial Bailout"
The government and ruling party emphasize that this policy is a way to save 'people'. By having society take responsibility for and resolve toxic debt that cannot be repaid or collected, they argue that **debtors should be given the opportunity to return to economic activity and become healthy members of society**. They assert that this is not merely 'financial bailout' but a 'human recovery policy' that will enable 1.13 million people to move forward with their lives again.
4. Opponents: "Only Diligent Repayers Are Suckers"…Equity and Moral Hazard Controversy
However, public opposition to this is very strong.
- Equity Issue: The loudest voices are those saying, "I'm a fool for working three jobs, two jobs, and desperately paying off my debt." They argue that it causes deep deprivation and frustration for those who have diligently repaid their debts.
- Moral Hazard: There are concerns that it could instill a false perception in society that "if you don't pay your debt and hold out, the government will eventually solve it." This could lead to serious 'moral hazard' that shakes the foundation of the national economy in the long run.
- Inflation Concerns: Some critics also argue that government subsidies will ultimately lead to price increases in services such as restaurants, fueling another form of inflation.
'Just Resolution' vs. 'Betrayal of Diligence'
This 'debt forgiveness' policy is a very complex and sensitive issue where the grand cause of 'social relief for debtors who cannot recover' clashes with the realistic backlash of 'loss of morale for diligent people'.
- What do you think of the government's large-scale 'debt forgiveness' policy? Are you for or against it?
- Between the argument that it is 'a policy that restores people' and the argument that it is 'a policy that makes diligent repayers suckers', which side do you sympathize with more?
- Do you think such debt adjustment policies are essential for our society? If so, how should they be supplemented to reduce the 'moral hazard' controversy?
Please share your various opinions.