Due to the prolonged COVID-19 pandemic, more citizens struggle to manage debt... Single-person households reach 58%

Seoul Welfare Foundation Seoul Financial Welfare Counseling Center Announces Last Year's Bankruptcy Discharge Support Status
More Than Half of Debtors Experienced Job Loss or Business Closure in the Past 3 Years, Yet Relief Comes Only After 5 Years Despite Crisis

[Asia Economy Reporter Lim Cheol-young] Among the citizens who applied for bankruptcy discharge last year through the Seoul Financial Welfare Counseling Center of the Seoul Welfare Foundation, the number of Seoul citizens struggling to manage their debts on their own due to the prolonged COVID-19 pandemic has significantly increased. It was found that a considerable number of citizens applying for personal bankruptcy were 'single male households aged 50 and above' suffering from malignant debt.

According to the center on the 22nd, the number of personal bankruptcy discharge applications filed with the Seoul Rehabilitation Court last year was 10,873, an increase of 15.8% compared to 9,383 cases in 2019 before the spread of COVID-19. Cases of personal bankruptcy applications routed through the center were 1,290, accounting for 11.8% of the total annual cases at the Seoul Rehabilitation Court, meaning that 1 out of 10 personal bankruptcy cases in the Seoul area was processed through the center.

In particular, most applicants were aged 50 and above (85.4%, 918 people), male (57.5%, 618 people), and recipients of public assistance (79.9%, 859 people), with the proportion of single-person households rising to 58.0% (624 people), up 8 percentage points from the previous year (50.0%). The majority of bankruptcy applicants (83.2%, 894 people) were unemployed, followed by wage workers at 7.4% (80 people) and self-employed at 1.4% (15 people).

More than half (54.2%, 582 people) of the applicants reported that up to three years before applying for personal bankruptcy, they were engaged in income-generating activities as wage workers (46.0%, 494 people) or self-employed (8.2%, 88 people). Considering that 51.8% (545 people) responded that their potential bankruptcy state had lasted for more than five years, it is interpreted that many faced long-term concerns about unemployment or business closure until just before bankruptcy.

The main causes of debt were 'lack of living expenses' at 46.0% (863 people), followed by 'business failure' at 21.3% (399 people), 'others' at 18.3% (343 people), and 'guaranteeing others' debts' at 6.9% (129 people). Additionally, the direct causes leading to insolvency included 'principal and interest exceeding income' at 32.8% (963 people), 'loss of income due to unemployment or business closure' at 34.0% (997 people), and 'medical expenses due to hospitalization' at 9.6% (283 people).

Park Jeong-man, director of the Seoul Financial Welfare Counseling Center (lawyer), said, “In 2021, the center strengthened support for financially vulnerable groups suffering from the prolonged COVID-19 pandemic and achieved a satisfaction score of 9.52 out of 10 in a survey.” He added, “We plan to further enhance active support so that citizens burdened with malignant debt can resolve their issues and start anew.”

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