Number of debt workout scheme applicants expected to hit record high in 2024

Seoul, Dec 22 The number of people newly-seeking assistance through a debt workout programme here is expected to reach an all-time high this year, government data showed on Sunday, amid the prolonged economic slowdown.

Under the state-managed bailout scheme, the Credit Counseling and Recovery Service (CCRS) collaborates with financial companies to provide individuals on the brink of insolvency a second chance by restructuring their credit obligations and writing off debt when necessary.

A total of 179,310 people applied for the program as of the end of November, according to data provided by the CCRS and submitted to Rep. Lee Jeong-moo of the main opposition Democratic Party. The annual figure is projected to surpass last year's record high of 184,867 applicants, reports Yonhap news agency.

Notably, the number of self-employed individuals, mostly those running small businesses, seeking to join the program reached 26,267 as of end-November, already exceeding last year's record of 25,024.

The surge is attributed to ongoing economic challenges, including high inflation and high interest rates, coupled with slower-than-expected domestic demand.

Additionally, corporate bankruptcies have also hit record levels this year.

According to separate data provided by court authorities, the number of corporate bankruptcy cases filed with courts came to 1,745 in the January-November period, surpassing the record high of 1,657 set in 2023.

The number of corporate bankruptcy rulings also rose significantly, with 1,514 cases recorded so far this year, up 16.3 percent from last year's total of 1,302 cases.

Meanwhile, the delinquency rate on loans held by self-employed individuals, primarily small business owners, in South Korea hit a record high in 2023.

The rate added 0.3 percentage point from a year earlier to reach 0.66 percent last year, according to data compiled by Statistics Korea. Both the delinquency rate and its growth rate marked all-time highs since the agency began compiling relevant data in 2017.

—IANS

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Source: IANS