The South Korean government’s debtor assistance with legal representation program, which aims to assist victims of illegal private lending, is yielding minimal results compared to the growing number of applications, data showed on Tuesday.

According to data obtained by the office of Representative Lee In-young of the ruling Democratic Party of Korea from the Financial Services Commission (FSC), the number of debt cases filed for the program was 3,897 (covering 962 individuals) by the end of June 2025 - already surpassing the total number for all of 2024 (3,096).

However, the number of lawyers available to handle these applications dropped from 69 in 2023 to 61 in 2024 before increasing by only one in 2025 to 62. Even that one addition is only serving in a part-time capacity.

The debtor assistance with legal representation program, introduced in 2020, provides free legal services by assigning lawyers to victims of illegal debt collection practices. Although the FSC oversees the program, only lawyers affiliated with Korea Legal Aid Corporation (KLAC) can serve as representatives under current law, so the program’s execution is delegated to the KLAC.

These representatives handle not only illegal debt collection calls but also legal claims for loan interest exceeding the legal cap (20 percent per annum), damages from illegal collection, and lawsuits to confirm the nonexistence of debt. Of the applicants in 2025, 95 percent were victims of illegal private lenders, while only 5 percent were victims of institutional lenders.

By type, illegal debt collection accounted for the most common issue at 2,339 cases (77.9 percent), followed by excessive interest rate loans at 172 cases (5.7 percent), and both issues combined at 490 cases (16.3 percent).

Despite most cases involving illegal private lenders, the lack of manpower means representatives often only respond to threatening phone calls with few cases progressing to meaningful legal redress. Only 43 cases, or 1.1 percent of the total, proceeded to litigation as of the end of June 2025 and none were resolved through pre-trial mediation either in 2024 or 2025.

There are also no available statistics on cases referred to the police for investigation, nor is there any system in place to track whether victims’ debts were fully paid.

Authorities argue that simply blocking illegal collection calls can offer immediate relief to victims, but illegal collections are bound to resume without concrete debt resolution during the six-month support period, which could be extended once for a maximum of one year.

The FSC requested additional funding for the program during its budget review in June 2025 as it expected 7,200 applications for the year. It also secured an additional 440 million won via a supplementary budget.

However, this additional funding is not being used to recruit more representatives. The FSC reportedly argues that it cannot hire more lawyers since the KLAC operates under the Ministry of Justice and thus falls outside the FSC’s budgetary authority.

“The debtor assistance with legal representation program is the last line of defense for vulnerable debtors, so it is crucial to ensure access to legal support,” Lee emphasized. “We need to consider measures to improve the program’s effectiveness, including better coordination with the police and financial authorities, as well as post-resolution monitoring.”

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