97,199 debt restructuring cases confirmed in H1
Individual cases account for 85,044 of total
Workout cases hit 5-year quarterly high in Q2
Small-loan applications by diligent repayers jump
Nearly 100,000 low-income borrowers were pushed to the brink of debt repayment in the first half of this year alone, worn down by high interest rates and rising living costs. Cases are also mounting of financially vulnerable borrowers who had been diligently repaying restructured debt now turning to small loans again to cover basic living expenses. The trend could worsen as the Bank of Korea has raised its benchmark interest rate two consecutive times, adding to the interest burden on the most at-risk borrowers.
According to data obtained from the Credit Counseling and Recovery Service by the office of Park Sung-hoon, a People Power Party lawmaker on the National Assembly's Political Affairs Committee, the number of confirmed debt restructuring cases in the first half of this year reached 97,199. The figure combines cases under the expedited debt adjustment, pre-debt adjustment and personal workout programs.
The number of confirmed debt restructuring cases has risen every year — from 121,095 in 2022 to 167,370 in 2023, 174,841 in 2024 and 189,062 last year — a 56.1 percent increase over three years. This year, in just six months, the total has already surpassed half of last year's full-year figure.
Of the first-half cases, 85,044 involved individual debt restructuring, accounting for the vast majority, while 12,155 involved self-employed borrowers. The total debt they could no longer manage and entered restructuring procedures for reached 5.74 trillion won ($4.16 billion).
The Credit Counseling and Recovery Service divides its debt restructuring programs by the length of delinquency. Borrowers overdue by 30 days or fewer qualify for expedited debt adjustment; those between 31 and 89 days for pre-debt adjustment; and those 90 days or more for the personal workout program.
The expedited debt adjustment program, used by borrowers in the early stages of delinquency, saw particularly sharp growth. Confirmed cases more than tripled from 16,766 in 2022 to 53,551 last year. In the first half of this year alone, 27,003 borrowers completed the expedited process.
Particularly steep was the rise among older borrowers. Confirmed expedited debt adjustment cases among those aged 70 and older jumped more than sevenfold, from 239 in 2022 to 1,684 last year. Over the same period, cases among those in their 60s rose from 1,015 to 5,339. In the first half of this year, borrowers in their 60s accounted for 2,800 cases and those 70 and older for 1,008, together making up 14.1 percent of all expedited debt adjustment cases.
Conditions also deteriorated for long-term delinquents — those overdue by 90 days or more. Personal workout cases climbed from 80,952 in 2022 to 99,912 last year, and reached 55,213 in the first half of this year. The second quarter alone recorded 30,054 cases, the highest quarterly figure in five years.
Cases of borrowers who had been faithfully repaying restructured debt but are now seeking small loans again for living expenses also jumped sharply. In the first half, diligent repayers filed 26,703 small-loan applications totaling 78.83 billion won.
The second quarter alone saw 14,893 applications worth 47.02 billion won — the highest quarterly application count since 2022. The figures point to a vicious cycle in which borrowers who sought a fresh start through debt restructuring are taking on new debt just to cover daily expenses.
"We need to comprehensively strengthen proactive financial management and recovery support measures so that vulnerable borrowers can break free from the vicious cycle of delinquency and re-borrowing," Park said. "We cannot remain stuck in an after-the-fact approach of simply restructuring debt and then extending new loans."
attom@heraldcorp.com
