The South Korea Financial Services Commission (FSC) and the Korea Asset Management Corporation (KAMCO) have launched the New Leap Fund, a long-term debt restructuring program aimed at supporting vulnerable groups and small merchants by purchasing delinquent debts from participating creditor institutions and then writing off or restructuring them. The program will begin purchasing delinquent debts in October 2025 from creditor institutions that have signed an agreement for around one year. Debtors’ wealth and income will be examined before proceeding with write-offs or restructuring from 2026, while beneficiaries under the basic living welfare assistance program will be eligible for a prompt write-off process in 2025 without an assessment of repayment capacity. The FSC forecasts eligible long-term delinquent debt of about KRW16.4 trillion, with around 1.134 million individuals benefiting, and notes there will be no separate application process because debts are purchased directly from participating creditors, with debtors notified after purchase and after completion of the assessment. For debtors outside the New Leap Fund’s coverage, the FSC plans additional support including, for three years, special debt restructuring through the Credit Counseling and Recovery Service for debts overdue for five years or more, with principal reductions of up to 80% and installment repayment of up to 10 years. Low-interest loans of about KRW500 billion over three years will also be provided for debts overdue for seven years or more that are already in a restructuring process, alongside further work linking support to employment and welfare programs and additional measures planned for the fourth quarter of 2025.

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