2025 Debt Relief in Korea for Foreigners: Bad Bank Program Guide

If you’re a foreigner living in Korea with unpaid debt, help might finally be on the way.
In October 2025, the Korean government is launching a new program that could reduce or even cancel long-overdue debt—including for some foreign residents.

But who qualifies? What kind of debt is covered? And how can you apply?

This guide breaks it all down, simply and clearly—so you can find out if this is your chance to reset financially.

Table of Contents :

Why This Matters
What Is Korea’s “Bad Bank Program”?
Can Foreigners Apply?
What Kind of Debt Can Be Reduced?
Step-by-Step: How to Prepare and Apply
What Benefits Can You Expect?
Red Flags: Who Should Be Careful or May Not Qualify?
Free Help: Where Foreigners Can Get Counseling
FAQ: Real Questions from the Foreign Community

Why This Matters: Foreigners and Long-Term Debt in Korea

Foreigners in Korea often face debt differently than locals.
A missed payment can grow quietly over years—especially if you're not checking Korean mail or don’t know where to ask for help.

And unlike citizens, most foreigners can’t turn to family support, don’t qualify for basic credit recovery programs, and risk visa issues if financial problems worsen.

That’s why this program matters.
It’s one of the few times the Korean government is considering foreign residents in a national debt relief plan. If you're eligible, this could be your first real chance to resolve old debt with official support—in your name, under your visa, and without shame.

What Is Korea’s “Bad Bank” Program?

In October 2025, South Korea will launch a new debt relief plan called the “Bad Bank” program—officially known as the Long-Term Delinquent Debt Restructuring Program.

Its goal? To help people who’ve been stuck with small, unpaid debts for years.
Through this program, the government buys old debts (usually over 7 years overdue and under ₩50 million) from lenders, and then offers a chance to reduce or restructure them.

This isn’t just financial support—it’s a way to close old debt records, clear your credit history, and re-enter Korea’s formal financial system.

Can Foreigners Apply for the Bad Bank Program?

The short answer: Some can. Not all.

As of July 2025, the Korean government is still finalizing the rules. But based on past debt programs, there’s a strong chance that certain foreign residents will be eligible.

You may qualify if you:

Hold an F-5 (permanent resident) visa
Have an F-6 (marriage immigrant) visa
Have been living in Korea long-term and can verify your income and debts

These categories are usually treated similarly to Korean nationals when it comes to social programs.

⚠️ However, you’re unlikely to qualify if you:

Are on a short-term visa (like E-9, D-series, or working holiday)
Have no proof of income or debt history in Korea
Are undocumented or overstayed

In short, if you’ve built your life in Korea and have official status, there’s a chance this program could help you.

What Kind of Debt Can Be Reduced?

Not all debts are covered—but if yours fits the criteria, you could benefit.

Here’s what the program focuses on:

Old debts: Must be at least 7 years overdue
Small amounts: Total ₩50 million (approx. $38,000) or less
Registered lenders: Your loan must be from a participating bank, card company, or savings bank

Examples might include:

A forgotten personal loan from years ago
Credit card debt that’s been growing with late fees
A cash loan from a bank that you couldn’t repay after losing a job

Debts from private, unregistered lenders or ones with recent legal action might not qualify.

The exact details of what will be covered are expected to be announced in Q3 2025—so now is the time to check your debt history and get ready.

Step-by-Step: How to Prepare and Apply

The program officially starts in October 2025, but you can start preparing now.
Here’s how to get ready and what to expect once applications open:

Step 1: Check Your Eligibility

Is your debt more than 7 years old?
Is the total amount under ₩50 million?
Was the loan from a registered financial company (not a private lender)?
If you answered “yes” to all three, you’re likely eligible.

Step 2: Gather Your Documents

You'll likely need:

Alien Registration Card (ARC) or visa copy
Income proof (e.g. payslips, tax records, bank statements)
Debt history (e.g. bills, overdue notices)
Certificate of Entry/Exit Records (출입국사실증명서)

💡 Tip: If you’re unsure what to submit, contact a foreigner counseling center before October. They can guide you in your language.

Step 3: Apply (Online or In Person)

Application will likely be available:

Online via KAMCO’s website (with 인증서)
In-person at designated centers (especially useful if you don’t have a Korean phone or certification)

Step 4: Wait for Review

The government will review your case and decide:

Whether your debt qualifies
How much of it can be reduced
If you can repay in installments or get a delay

You’ll get results via text, call, or mail—usually within a few weeks.

What Benefits Can You Expect?

The Bad Bank program isn’t a “get out of debt free” card, but it can make a huge difference.

Depending on your case, you may get:

Partial or full debt reduction
Especially for very old, small-value debts
Interest and penalty forgiveness
Long-term late fees or legal fines might be removed
Flexible payment plans
If you can’t pay right away, you may be allowed to repay slowly over time—or even delay repayment temporarily

These benefits are meant to help you get back on your feet, not punish you for past struggles.

But remember: Every case is different. That’s why early consultation is key.

Red Flags: Who May Not Qualify

This program isn’t open to everyone—and there are some things that could hurt your chances.

You might not be eligible if:

You have no legal visa status or have overstayed
You're on a short-term visa (like E-9, D-4, working holiday)
You can’t prove your income or debt history
Your debt is less than 7 years old, or from a non-participating lender
You’re already going through bankruptcy or court-led debt programs

Also, be careful not to:

Lie or exaggerate on your application
False info can get you banned from future financial help
Ignore updates
Final rules are expected by late Q3 2025—make sure to check official sites for announcements

💡 Bottom line? If you’re unsure, don’t guess—get advice before applying.

Free Help: Where Foreigners Can Get Support

If this process feels overwhelming—don’t worry.
There are several places in Korea where foreigners can get free debt counseling and application help, often with language support.

● 서민금융진흥원 외국인 상담센터 (KFIA)

☎ 1397 (Press 5 for foreigner services)
Website: www.kinfa.or.kr
Services: Counseling, document support, interpretation

● 한국자산관리공사 (KAMCO)

☎ 1588-3570
Website: www.kamco.or.kr
Services: Program info, application schedule, debt eligibility

● 대한법률구조공단 외국인팀 (KLAC)

☎ 132
Website: www.klac.or.kr
Services: Legal help with debt, visa, or civil issues

💡 Many centers offer interpreters in English, Chinese, Vietnamese, and more—but always call ahead to check available languages and hours.

FAQ: Real Questions from the Foreign Community

Q1. I’m self-employed. Can I still apply?
Yes—if you can show proof of income (bank records, tax filings, or invoices). Self-employment is acceptable as long as it's documented.

Q2. I’ve changed visas several times. Will that affect my eligibility?
Not directly. What matters most is your current visa type and whether you’ve stayed in Korea long enough with legal status. Keep track of your visa history.

Q3. Can I apply if my debt was originally under someone else’s name?
No. You must be the legal debtor. If the debt was in someone else’s name—even if you paid—it won’t count.

Q4. I have student loans from another country. Can I include those?
No. Only debts owed to Korean financial institutions are considered. Foreign debt isn’t part of this program.

Q5. What happens if I get denied? Can I try again?
Possibly. You may reapply if your situation changes (e.g. new documents, new visa). But you’ll need to wait for the next review cycle and submit updated paperwork.

Korea’s Bad Bank program might be a once-in-a-decade chance to reduce or erase burdens from the past.
And while not every foreigner will qualify, those who do should prepare early and take action.

Double-check your documents, reach out for help, and stay updated on the final rules this fall.

Because a fresh financial start might be just a few steps away.