No Night Calls From Loan Sharks
Jane Han
Staff Reporter
Kim Jwa-hoon, who runs a debt collection agency, is about to restructure his firm's nationwide network of collectors because his overnight squad, in charge of making late night contacts, will no longer be needed starting next month.
That's because the country's financial regulator said Thursday that revised legislation regulating debt collectors' practices will take effect Aug. 7.
The changes will ban collectors from calling or visiting debtors after 9 p.m. and before 8 a.m. Those violating the new law could face up to three years in prison or up to 30 million won in fines, according to the Financial Services Commission (FSC).
Kim says the revision is going to affect his business in a significant way since a large portion of the current collection activity is carried out late at night.
"It's tough trying to get in touch with people during the day when they're at work," said Kim, who operates a dozen offices nationwide with a staff of 30. His services include tracking down a debtor, analyzing his or her finances and making contacts via phone or in person to collect the amount owed.
Industry experts say the heightened regulations are likely to step up collectors' daytime practices.
"We have money to collect, so we need to think of other ways to get work done," said a worker at another local collection agency.
However, their beefed up activities won't include physical abuses or threats, as the legislation will also clamp down on such harassment.
If collectors use violence or unlawful threats as a means to force payment, they will face up to five years in jail or 50 million won in fines, the FSC said.
They are also banned from forcing a debtor's family and friends to pay back the borrowed money.
All of this is good news for the snowballing number of credit delinquents, many of whom in recent months have even been compelled to commit suicide due to extreme financial pressure.
"Many debtors are severely pressed and intimated by the mental pressure they receive from collectors, not so much the amount they have to pay back," said Shin Joong-ho, spokesman of the Credit Counseling & Recovery Service, a non-profit organization that gives practical advice to debtors.
He said the upcoming changes will eliminate some of the long-running illegal tactics, which will help reduce some of the money-related crimes and suicides.