After borrowing money from financial companies and failing to repay, the number of users who applied for debt adjustment to the Credit Counseling & Recovery Service (CCRS) in the first half of this year exceeded 100,000. The annual number of debt adjustment applicants was in the 120,000–130,000 range in 2020–2022, but it began to surge in 2023 and continues to rise this year. With the domestic market sluggish and the recession continuing, analysts say more debtors are unable to repay their debts.
According to data submitted by the CCRS to People Power Party lawmaker Lee Yang-su on the 8th, 103,550 people applied for debt adjustment in the first half of this year. It is expected to be at a level similar to last year's annual total of 195,432.
The number of debt adjustment applicants gradually increased after the domestic market slump began due to the impact of COVID-19, then jumped 33.8% year over year in 2023 to 185,143. It has continued to trend upward since.
Debt adjustment run by the CCRS is a system that helps debtors struggling to repay by writing off part of their debts or extending repayment periods so they can repay. Depending on the period in arrears, it is divided into three types: expedited debt adjustment (less than 1 month), pre-debt adjustment (1–3 months), and individual workout (3 months or more). Expedited and pre-debt adjustment reduce overdue interest through interest rate adjustments, while individual workout writes off up to 70% of principal.
Looking at debt adjustment applicants by age over the past five years, those in their 40s accounted for the largest share. As of the first half of this year, among people in their 20s to 60s, applicants in their 40s made up the highest share at 28.1%. The next highest age group was those in their 50s (23.7%). People in their 40s also maintained a figure close to 30% between 2020 and 2024, recording the highest share.
The CCRS believes that the number of debt adjustment applicants has increased as self-employed people's debt has risen sharply amid the recent domestic market slump. According to Statistics Korea, the retail sales index in the second quarter of this year was 101.8, down 0.2% from the same period last year. Retail sales have declined for 13 consecutive quarters due to prolonged domestic weakness. According to the Korea Labor Institute (KLI), as of 2023, among economically active people in their 40s in Korea, the share of the self-employed was 20.5%, and among those in their 50s it was 63.7%, far higher than people in their 20s to 30s, whose share was around the 10% range.
The business closure rate is also surging. According to the National Tax Service, the number of business operators, including individuals and corporations, who filed for closure last year was 1,008,282. That was an increase of 21,795 from the previous year and, for the first time in 30 years since related statistics were compiled in 1995, exceeded 1 million.
Lee Yang-su said, "The rise in the number of people applying for debt adjustment because they cannot repay their debts is a sign that the household economy is worsening," and emphasized, "The government needs to come up with concrete measures to revive the economy affecting people's livelihoods."