“1 million won became tens of millions” – 304 Gyeonggi residents rescued from illegal loan trap

The Gyeonggi Welfare Foundation has announced significant results in its support for victims of illegal private lending, assisting 304 residents of Gyeonggi Province. The foundation successfully resolved a total of 2,039 debt cases, effectively ending the cycle of predatory lending for these individuals. This initiative focused on providing substantial relief, including the direct recovery of 70 million won in illegally collected profits. Furthermore, the foundation prevented an additional 3.44 billion won in potential damages by intervening against aggressive and unlawful collection practices.

Many victims, often excluded from the formal financial system, turned to illegal lenders due to temporary shortages in operating funds or living expenses. This often led to a dangerous cycle of "debt rollover," where new loans were taken out to cover existing high-interest debts, causing the original small amounts, sometimes as low as 1 million won, to balloon into tens of millions. Victims frequently endured severe psychological distress from constant threats, insults, and harassment, including contact with family members and employers.

An analysis of the victims revealed a stark picture of financial vulnerability. Of those whose credit scores were assessed, a staggering 91% fell into the bottom 20% of credit ratings. Additionally, 74.6% of victims with confirmed incomes earned less than 3 million won per month. While many initial loans were for small amounts under 10 million won, the problem was particularly acute for small business owners and self-employed individuals. Among these entrepreneurs, 30% had suffered losses exceeding 50 million won, underscoring the severe impact of rollover schemes on their livelihoods.

Beyond debt resolution, the foundation is also focusing on the victims' overall well-being. Recognizing that illegal lending can lead to severe mental health crises, the foundation has strengthened its collaboration with the Gyeonggi Suicide Prevention Center. This partnership ensures that individuals exhibiting signs of severe psychological distress or suicide risk are promptly referred to specialized professional institutions for immediate support.

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Illegal private lending is not just a debt dispute; it is a complex welfare crisis intertwined with urgent livelihood needs.