When a loan falls into arrears and you lose the benefit of the term, the whole remaining balance becomes due at once. Loan agreements used to charge default interest on that whole balance. Article 7(1) of Korea’s Individual Debtor Protection Act stops this: even after acceleration, the lender can’t charge default interest on the part that, under the original agreement, wasn’t yet due, and Article 7(2) voids any term to the contrary. Under Article 3(2) and Decree Article 4(1), Article 7 doesn’t apply to a debt with principal of 50 million won or more, and Addendum Article 2 applies it to agreements made, renewed or extended after the Act took effect (17 October 2024, our sum).
1. Even after acceleration, no default interest on the part not originally due.
2. Principal under 50 million won, agreements made, renewed or extended after 17 October 2024.
3. A breach carries a fine of up to 30 million won — and extra costs are only those in the Decree (a debt statement within 10,000 won).
Calculator
Updates as you type. With Art. 7 we charge the contract rate plus the surcharge only on the overdue amount, and the contract rate alone on principal not yet due — Art. 7 only says no default interest on that part, so the plain-rate part is our assumption. Interest = amount × rate × days ÷ 365, rounded down. The Act sets no surcharge rate; use your loan agreement’s.
What the article says — Art. 7
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Limit (1) | Even after arrears cause acceleration, on the part not yet due under the old agreement the lender can’t receive default interest, though it has become payable | Reads as “default interest on the overdue amount only” |
| Contrary terms (2) | A term charging default interest on that part is void | — |
| Costs (3) | Actual costs of managing or recovering the debt that the Decree lists may be charged separately | Decree Art. 6 below |
| Exclusion (Art. 3(2), Decree 4(1)) | Art. 7 doesn’t apply where principal is 50 million won or more | By loan principal |
| From when (Addendum Art. 2) | Claims under agreements newly made, renewed or extended after the Act took effect | An older loan is covered once extended |
| Breach (Art. 52(2)1) | Charging default interest on that part: a fine of up to 30 million won | — |
Costs that can be charged separately — Decree Art. 6
- Costs the debtor (or a related person) agreed before the repayment period to bear
- Actual cost of issuing a debt statement (proof of principal, interest, costs and due dates), within 10,000 won
- Other costs the Financial Services Commission recognises by notice (we didn’t read the notice)
Working it through — our example
Say you borrowed 30 million won, 27 million won of the remaining principal wasn’t yet due under the original schedule, and 1 million won is already overdue. Contract rate 6%, default surcharge 3 percentage points, 30 days.
| Sum (our example) | Amount | Worth noting (ours) |
|---|---|---|
| Overdue 1 million won × 9% × 30 ÷ 365 | 7,397 won | Default interest |
| Not-yet-due 27 million won × 6% × 30 ÷ 365 | 133,150 won | Contract interest only (our assumption) |
| Total with Art. 7 | 140,547 won | The calculator’s default |
| Whole 28 million won × 9% × 30 ÷ 365 | 207,123 won | What it looks like without Art. 7 |
| Difference | 66,576 won | Rounding down can shift this by 1 won |
Rates and amounts are our example. This Act sets no ceiling on the default surcharge, and we didn’t read other rules (supervisory regulations, loan terms). If the principal is 50 million won or more, the calculator shows the whole-balance figure.
The notice before acceleration — Art. 6
For debts with principal under 30 million won, the lender must send the planned date, reason, effect and how to ask for a debt adjustment by registered post or hand delivery at least 10 business days before the benefit of the term is lost (Art. 6(1), Art. 3(3), Decree Art. 5(2)). If you ask for an adjustment by the day before that date, the benefit of the term is kept until the procedure ends. The deadline sums are in the debt adjustment request calculator.
Checklist
- ☐ The loan principal is under 50 million won
- ☐ Made after 17 October 2024, or renewed or extended since
- ☐ Check your statement that default interest sits only on the overdue amount (our tip)
- ☐ Fees and costs fall within Decree Art. 6; a debt statement within 10,000 won
- ☐ If you got an acceleration notice, consider asking for a debt adjustment
Questions that remain
Does the not-yet-due part carry no interest at all?
The article says only that default interest can’t be received. It doesn’t say what happens to ordinary interest on that part, so the calculator applies the contract rate (our assumption). Check your loan agreement for the actual figure.
Is a secured loan the same?
Article 3(1) excludes secured debts only from Art. 6(5), Art. 9 and Art. 10(1); Art. 7 isn’t on that list. What decides Art. 7 is the 50 million won principal test (Art. 3(2)).
Sources
- Korean law database (law.go.kr) — Act on the Management of Personal Financial Claims and the Protection of Personal Financial Debtors Arts. 3, 6, 7, 52 and Addenda — source (current text, effective 2 January 2026, Act No. 21065, amended 1 October 2025 by another Act; checked 3 November 2026). Exclusions (Art. 3(1)–(3)), the acceleration notice (Art. 6), the default interest limit, voidness and costs (Art. 7), the 30 million won fine (Art. 52(2)1), Addenda of Act No. 20054 (16 January 2024): Art. 1 (in force 9 months after promulgation) and Art. 2.
- Not read. The Fair Debt Collection Practices Act; FSC notices; sector supervisory rules on default rates; case law.
- What we added. The “worth noting” column and the Korean everyday gloss.
Sources
- Korean law database (law.go.kr) — Act on the Management of Personal Financial Claims and the Protection of Personal Financial Debtors Enforcement Decree Arts. 4, 5, 6 — source (current text, effective 1 October 2025, Presidential Decree No. 35811; checked 3 November 2026). 50 and 30 million won (Art. 4), notice method (Art. 5), separate costs and the 10,000 won debt statement (Art. 6).
- Not read. Costs set by notice.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your lender — the surcharge in your agreement and your repayment history.
- Financial Supervisory Service — disputes over default interest (we didn’t read the complaints process).
Written on 3 November 2026. The content is from the source; the glosses are ours.
