The Financial Supervisory Service of South Korea is initiating field inspections on lending companies to prevent the illegal extension of expired debts during debt collection processes.
The Financial Supervisory Service (FSS) of South Korea has announced that it will conduct field inspections to curb practices by lending firms that unjustly extend the statute of limitations on overdue debts. On March 3rd, the FSS held a meeting with CEOs of 17 lending companies and brokers to lay out this new plan. Typically, overdue debts expire after five years, at which point the law recognizes that the debt no longer exists. However, there have been numerous reports of lenders applying for payment orders before the expiration or encouraging small repayments after the statute has lapsed, thereby attempting to revive expired debts. In response, the FSS aims to eliminate these improper practices through rigorous inspections and has plans to draft guidelines alongside the Korea Financial Services Association to prevent reckless extensions of limitations for vulnerable borrowers.
