Last week, I introduced you ‘Credit Counseling & Recovery Service (CCRS)’, a non-profit corporation to support debtors in financial difficulties. As written in the previous post (https://financialservicescommission.wordpress.com/2012/09/21/ccrs-credit-counseling-recovery-service/), CCRS seeks to promote debtors’ financial and emotional well-being and to build financially healthier society. More specifically, CCRS was founded for the purpose of effective management of debtors who are liable for multiple loans. Since its establishment in 2002, it has already been 10 years!
To celebrate its 10th anniversary, CCRS held a symposium at the Korea Federation of Banks on 25th of September. FSC’s Vice-Chairman, Choo Kyung ho, was invited to the symposium to address the keynote speech. Mr. Choo, recognizing the household debt as a potential threat to our sound economic and financial system, acknowledged that the role of CCRS has a paramount significance.
It has been talked a lot that low-income households and low-credit rating households are highly exposed to financial vulnerability and exclusion. Usually those households are suffering from pressure of debt repayment. When their repayment capabilities are declining, household debt issue is looming in our economy. That’s why financial authorities are continuously designing measures to support them. Examples are the ones that I have introduced you so far. As you know, there are lots of microfinance measures such as New Hope loan, Sunshine loan, and Smile microcredit. Protection mechanism for consumers has been enhanced, responding to illegal private loans and financial frauds.
CCRS has contributed to a great help to support those households who are, otherwise, becoming debtors with huge financial burdens. Mr. Choo mentioned CCRS’s remarkable achievement over the past decade, “CCRS is actively promoting debt rescheduling programs on the basis of ‘settlement’ between debtor and creditor. This allows ‘win-win-result’ for both parties. CCRS has done 100 million cases of rescheduling so far, which resulted in a declining trend of default since 2004.” Unlike public debt rescheduling through legal proceedings, CCRS’s debt rescheduling does not bring stigma effect to a debtor. Hence, a debtor will not suffer any kinds of legal, social, or economic disadvantages even after going through the rescheduling program.
Closing the keynote speech, Mr. Choo asked CCRS to keep working towards serving its role as a social safety net for financially vulnerable households. Moreover, the need for financial education was emphasized by Mr. Choo. “Debt rescheduling itself is a very meaningful follow-up measure to prevent household debt issue in advance. However, providing a proper financial education would be more fundamental and pre-emptive approach. The public should be well educated about an adequate management of individual financing”, said Mr. Choo at the end of his speech.