20s Who Received Debt Adjustment Due to Inability to Repay Loans Reach 4,654... Doubled in 6 Years

Debt Amount Also Increased Threefold from 12 Billion in 2018 to 41 Billion in 2023
Assemblyman Choi Seung-jae "Urgent Discussion Needed on Youth Debt Solutions"

The number of young people receiving debt adjustment (individual workout) due to inability to repay their debts has more than doubled in the past six years. There are urgent calls for discussions on the debt problems of the youth and improving their repayment capacity.

According to data submitted by the Credit Recovery Committee to Choi Seung-jae, a member of the National Assembly's Political Affairs Committee from the People Power Party, the number of confirmed individual workout principal reductions for those aged 20 and under in the first half of this year was 4,654. This is more than double the 2,273 recorded in the first half of 2018, marking the highest figure for the first half of the year in the past six years. Although the number slightly decreased from 4,019 in the first half of 2021 to 3,509 in the first half of 2022, it has returned to an upward trend.

The scale of principal debt reduction also showed the highest growth rate among those in their 20s. The confirmed principal debt reduction amount for individual workouts in this age group in the first half of this year was 41.013 billion KRW, more than three times the 11.983 billion KRW recorded in the first half of 2018. The average debt reduction per person (estimated) also increased by 67.2%, from 5.3 million KRW in the first half of 2018 to 8.8 million KRW this year, recording the highest growth rate among all age groups.

Individual workout is a credit recovery system that reduces overdue interest and principal (up to 90%) for debtors who have been in long-term arrears for more than three months. The increase in individual workouts indicates a rise in the number of people with deteriorating repayment ability.

Accordingly, there are urgent calls for managing the debt problems of young people in their 20s. Assemblyman Choi Seung-jae stated, “During the COVID-19 period, young people in their 20s were unable to find jobs, leading to reduced income and a significant increase in individual workouts.” He added, “As various warning signs such as increased bank delinquency rates among the youth, rising unpaid interest on small living expense loans, and increased delinquencies in BNPL (Buy Now Pay Later) services are detected, it is urgent to have in-depth and fundamental discussions on youth debt issues and improving their repayment capacity.”

Individual workouts are increasing across all age groups. The total number of confirmed individual workout principal reductions was 38,494 in the first half of this year, a 61% increase from 23,972 in the first half of 2018. The scale of debt also grew from 279.394 billion KRW in the first half of 2018 to 653.58 billion KRW in the first half of 2023. By age group, those in their 40s were the largest with 10,504 people (201.964 billion KRW), followed by those in their 50s (9,332 people, 180.711 billion KRW), 30s (8,104 people, 129.096 billion KRW), and 60 and older (5,900 people, 101.124 billion KRW).

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