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Q: [Bankruptcies on the Rise Among Young Koreans]



A growing number of Koreans in their 20s and 30s are filing for bankruptcy protection after borrowing heavily to make imprudent investments.


One in five people who turned to the Seoul Bankruptcy Court between July and August were in their 20s, rising to one in two if people in their 30s are included.

There has been a steep increase in bankruptcies among people in their 20s, rising from 245 in the first half of this year to 322 in July and 315 in August. They accounted for an unprecedented 19.6 percent of all bankruptcy protection filings in July and August.


In 2020, people in their 20s accounted for just 10.7 percent of bankruptcies, but their proportion doubled in just a year and a half. Two years ago the proportion of bankrupt people in their 20s and 30s stood at 42.5 percent, but it rose to 45.1 percent last year and 47.9 percent in the first half of this year.



The main reason seems to be an explosive increase in young people taking out loans to buy stocks or cryptocurrencies that turned sour and may be just the tip of the iceberg.



When apartment prices surged last year, many young people also took out huge loans to panic-buy starter homes before prices rose even further.

Now soaring interest rates and falling property values are feared to push many of these highly leveraged home owners to the brink.



Oh Jung-keun at Konkuk University said, "Since they don't own a lot of assets, young people have a tendency to make bold investments hoping to strike it rich. The Seoul Bankruptcy Court has changed regulations and lowered the bar for qualifying for bankruptcy protection, and the surge in young applicants shows just how many of them fell into debt after borrowing heavily to invest."



"Interest rates are expected to keep rising for the time being, while the chances are high that crypto and stocks will fall further, which means the financial conditions of investors will worsen," said Park Hyun-keun of the Korea Regenerative Bankruptcy Bar Association.


"It doesn't take a genius to see that more young people will knock on the doors of the bankruptcy courts."



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