President Lee Jae-myung instructed the Ministry of Justice on the 14th to review legislation enabling criminal punishment for illegal lending that exceeds five times the legal interest rate. Speaking at a cabinet meeting at the Blue House, the president also requested the ministry examine debt relief standards for vulnerable debtors. The directive follows a recent reported case of a family suicide attributed to debt, with Lee emphasizing that current laws void interest over 20% and principal over three times the legal rate but lack criminal penalties for the most extreme usury cases.
President Lee Directs Criminal Penalties for Extreme Usury
At the cabinet meeting on the 14th, President Lee stated, "When I was in the party, we proposed that if legal interest exceeds 20%, the interest is void; if it exceeds 3 times, the principal is void; and if it exceeds 5 times, there should be criminal punishment, but we ultimately couldn't create the criminal punishment clause." He added, "That should also be punished. Please review imposing criminal penalties when (legal interest) exceeds 5 times at the Ministry of Justice."
Justice Minister Jeong Seong-ho responded, "We will review various types."
The president referenced a recent news report about a family suicide, stating he saw content indicating it was due to debt. He emphasized, "The clear fact is that the current level of the Republic of Korea is not so bad that one must die embracing children because of debt."
![President Lee Jae-myung questions Foreign Minister Jo Hyun at the cabinet meeting at the Blue House on the 14th]()
Debt Relief Standards Review Requested for Vulnerable Debtors
President Lee requested legislative review of debt relief standards. Blue House Policy Director Kim Yong-beom noted, "The Seoul Rehabilitation Court provides debt relief special treatment (repayment period reduction special treatment) up to 24 months according to practical guidelines, but only Seoul Rehabilitation Court does this, and other rehabilitation courts differ." He pointed out, "There is a regional gap that needs adjustment."
Kim added, "Special treatment applies only up to age 30, but in law, youth extends to 34. This also needs adjustment."
The president responded, "The nationwide differences are an immediate problem, so if it doesn't contradict the purpose of the Rehabilitation and Bankruptcy Act, we can set certain standards." He instructed, "Please review both options: enforcement decree or consultation with the courts."
Lee directed the Ministry of Economy and Finance and the Financial Services Commission, "Please review legislating debt relief standards."
Current Legal Framework Gaps Identified
President Lee explained the existing legal protections: "If it's a situation where you really can't repay to the point of death, under the current legal system, if you apply for bankruptcy relief or rehabilitation, they exempt everything. You can eliminate the debt." He stated, "There's no reason to die. Embracing young children and dying is an act of murder."
The president reiterated, "If interest exceeds 20%, the interest is void; if interest exceeds 60%, you don't have to repay even the principal." He emphasized, "But they continue (illegal lending), so isn't it actually pressure? Please review imposing criminal penalties when it exceeds 5 times."
Lee noted, "Even now, there seem to be difficult aspects to debt relief. If someone who became a debtor decides on death, they're someone who cannot repay." He concluded, "No matter how much you squeeze, will money come out? It's better to give them relief."
FAQ
What did President Lee Jae-myung order regarding illegal lending on the 14th?
President Lee Jae-myung instructed the Ministry of Justice on the 14th to review legislation for criminal punishment of illegal lending that exceeds five times the legal interest rate. He made this directive at a cabinet meeting at the Blue House, stating that current law voids interest over 20% and principal over three times the legal rate but lacks criminal penalties for extreme cases.
Why did President Lee request debt relief standards legislation?
President Lee requested legislative review of debt relief standards after Blue House Policy Director Kim Yong-beom identified regional disparities in debt relief practices. The Seoul Rehabilitation Court allows 24-month debt relief special treatment while other courts differ, and current special treatment applies only up to age 30 despite the legal youth definition extending to 34. Lee directed the Ministry of Economy and Finance and Financial Services Commission to review legislating standardized debt relief criteria.
What are the current legal protections against excessive interest rates?
Under current law, if interest exceeds 20% of the legal rate, the interest is void. If interest exceeds three times the legal rate (60%), the principal is also void and does not need to be repaid. However, there are no criminal penalties for lending at rates exceeding five times the legal interest rate, which President Lee seeks to address through new legislation.
