[Household Debt Time Bomb Multiple Debtors] 518 Trillion Won Ponzi Scheme 'Debt Trap'

4.23 Million Multi-Debtors Borrowing from 3 Financial Firms
79 Trillion KRW and 14,000 People Increase in 4 Years
Average Loan per Person 122.19 Million KRW... Default Warning Signs

[Asia Economy Reporters Kwangho Lee, Kiho Sung] The total loan amount of multiple debtors who roll over debt with more debt has reached 518 trillion won. In particular, the number of multiple debtors under the age of 30, mostly consisting of Yeongkkeul (pulling together all one's resources) and Debt Investment (borrowing to invest) groups, is explosively increasing, highlighting the need for special management by financial authorities.

According to the '2017-2020 Multiple Debtor Statistics' submitted by the Bank of Korea to Yoon Chang-hyun, a member of the National Assembly's Political Affairs Committee from the People Power Party, as of the end of last year, there were 4.236 million multiple debtors with a total loan amount of 517.6 trillion won. This means an average borrowing of 122.19 million won per person.

Multiple debtors are those who borrow money from three or more different financial companies. Typically, they borrow from the second-tier financial sector (savings banks, card companies, capital companies) or the third-tier financial sector (loan companies) with higher interest rates because they cannot borrow from the first-tier financial sector (banks). This is often considered a ticking time bomb for household debt defaults.

The loan amount of multiple debtors has increased sharply in recent years. It expanded from 438.9 trillion won at the end of 2017 to 466.1 trillion won at the end of 2018, and 479.2 trillion won in 2019.

As of the end of last year, it increased by 78.7 trillion won (17.9%) over four years. The number of multiple debtors also surged from 4.042 million in 2017, 4.166 million in 2018, to 4.222 million in 2019, and increased by 14,000 from the previous year last year.

518 Trillion Multiple Debtor Household Debt: A Ticking Time Bomb... "Urgent Need for Financial Authorities' Management and Supervision"

In particular, the number of multiple debtors under the age of 30 increased significantly. As of the end of last year, the proportion of multiple debtors under 30 was 25.2%, the second highest after those in their 40s at 32.7%. Those in their 50s and 60s or older accounted for 29.1% and 13.0%, respectively.

However, compared to the previous quarter, the proportion of those in their 40s (33.3%) and 50s (29.8%) decreased, while those under 30 (23.9%) increased by 1.3 percentage points. This is interpreted as the influence of the under-30 group leading the Yeongkkeul and Debt Investment craze and rolling over debt.

The increase in multiple debtors among high-income earners is also notable. Looking at the composition of multiple debtors by income level, last year, high-income earners (top 30%) accounted for 65.7%, the only group to increase by 0.2 percentage points compared to the previous quarter. Middle-income earners (30-70%) accounted for 24.9%, and low-income earners (bottom 30%) accounted for 9.4%, slightly down from 25.0% and 9.5%, respectively, during the same period.

Assemblyman Yoon Chang-hyun pointed out, "Multiple debtors with low repayment ability could become a household debt time bomb during the upcoming interest rate hike period, so detailed policy implementation and management and supervision by financial authorities are necessary."

This content was produced with the assistance of AI translation services.