Skyrocketing Bankruptcy Filing by Individuals

An increasing number of individuals are filing bankruptcy due to the burgeoning personal debts. The government, in response, is preparing for the introduction of the walkout for individuals, but many cast doubts over the effectiveness and rationality of the policy.

According to the information released on August 1st by the District Court of Seoul, a total of 184 bankruptcy petitions were filed by individuals during the first half of this year (Jan. – Jun.). The number is 42% higher than that of last year during the same period. This year’s total is expected to exceed that of last year, which is the highest so far in history. Almost half of petitions are being filed only in Seoul.

The District Court granted bankruptcy in 106 cases out of the 145 cases, carried over or not, which were heard before the Court from January to June this year. This shows a 93% increase from last year’s 55 cases during the same period. All individual petitioners discharged have lesser assets than debts. 11 cases were dismissed.

Judge Yoon Jong-koo of the Seoul District Court explained, “In the past, the petitioners borrowed money from their friends, relatives or private lenders. Nowadays, they file petitions due to the bank loans or credit card debts. Still the majority of cases are being filed due to financial matters caused in running households. But a significant number of cases are being filed due to hyper-consumption by the petitioners.”

The bankruptcy courts have rendered the order of discharge in many cases, considering the increased number of debtors since the economic crisis and the second chances the petitioners may have through the order. Once the order of discharge is entered, the petitioner no longer has to pay back the debts.

During the first half of this year, the debtors who have filed bankruptcy petitions for discharging have reached 73 in number, a 59% increase from last year. The courts have ordered partial or total discharging in 69 cases (90.7%) out of the 76 cases, which include carried over cases from last year.

Sang-Chul Kim Jung-Eun Lee sckim007@donga.com lightee@donga.com