Legislation Eyed to Protect Debtors From Threat of Loan Sharks
By Kim Rahn
Staff Reporter
A lawmaker is moving to legislate a bill which would protect debtors from the threat of loan sharks.
The plan came out after popular actor Ahn Jae-hwan allegedly committed suicide as he was unable to overcome threats from moneylenders seeking to collect overdue debts.
Rep. Lim Doo-sung Thursday said his bill calls for private moneylenders to be subject to three years in jail or up to 30 million won in fines, if they trespass at the houses or workplaces of debtors or their family members, or if they cause fear to debtors by visiting or calling their homes at night.
Moneylenders posing as police officers, court officers or lawyers would face up to five years behind bars or 50 million won in fines.
The measures come as more and more people borrow money from loan sharks amid an economic slump and many of them face illegal and coercive pressure to repay their debts, which snowball to uncontrollable levels.
According to the Financial Services Commission, the size of the private loan market was 16.5 trillion won ($1.4 billion) in June. More than 5 percent of the total population aged over 20, or roughly 1.9 million, have resorted to the unauthorized loans. Some 21 percent of them are, or were, credit defaulters.
They borrowed 8.7 million won on average. About 18,000 loan sharks have been doing business across the country. An inclusion of unregistered ones would push the figures higher.
Cash-strapped credit defaulters and the jobless are victims of the loan sharks. The maximum legal lending rate is 49 percent per annum but the rate is said to be as high as 72.2 percent.
Private moneylenders use coercive methods to threaten those failing to make payments, sometimes leading to their suicides under pressure.
The late actor Ahn, who was found dead in an apparent suicide, had reportedly suffered from bullying from debt collectors.
It is alleged that loan collectors threatened to harm not only Ahn but also his wife, comedienne Jung Sun-hee. Ahn's family claimed he killed himself unable to bypass the threat. It is suspected that the late actor was once kidnapped by loan shark agents.
Street lenders even haunt students, who borrow money for tuition or other purposes and cannot pay it back. Earlier this month, a college student in North Jeolla Province killed himself at school after failing to pay back debts. His family claimed he borrowed 500,000 won, which later climbed to 7.5 million won.
``Private moneylenders' illegal and coercive money collection has reached intolerable levels, which needs a legal crackdown,'' Rep. Lim said.
He also urged authorities to apply stricter rules in giving out licenses to loan agencies and supervising them, as well as to lower the interest limit.