Increase in Bankruptcy Filings Due to COVID-19... Personal Bankruptcies Reach Highest Level in 5 Years

[Asia Economy Reporter Kim Daehyun] Due to the economic downturn caused by the spread of COVID-19, the number of personal and corporate bankruptcy filings significantly increased last year.

According to the Supreme Court's "2021 Judicial Yearbook" released on the 27th, the number of personal bankruptcy cases filed nationwide last year was 50,379. This is an increase of 4,737 cases compared to 2019 (45,642 cases), before the outbreak of COVID-19, marking the highest number in five years. The courts approved 44,417 of these cases.

Corporate bankruptcy filings reached 1,069 cases, up by 138 from 2019 (931 cases), with the courts accepting 875 of them. This is the first time since the related statistics began in 2004 that corporate bankruptcy filings exceeded 1,000 cases.

During the same period, 49,467 discharge of debt applications were filed, an increase of 10.28% (4,614 cases) from 44,853 cases last year. The courts approved 38,390 of these. Discharge of debt is a system that eliminates debts for those who have lived honestly and diligently but were declared bankrupt due to economic fluctuations or natural disasters, providing them with an opportunity for a new life. It allows a fresh start by freeing them from debt.

On the other hand, personal rehabilitation applications, which allow debtors to be exempted from the remaining debt after faithfully repaying for a certain period, significantly decreased. Last year, 86,553 personal rehabilitation cases were filed, a decrease of 6,034 cases compared to 92,587 cases in 2019. Rehabilitation is applied for when there is a possibility of business recovery, and the court determines whether to approve it. The decrease in rehabilitation applications can be interpreted as many people viewing the economic outlook as uncertain or difficult.

Meanwhile, the total number of lawsuits filed with the courts last year was 6,679,233. Among these, civil cases accounted for the largest portion at 72.3% (4,829,616 cases). Criminal cases made up 22.7% (1,516,109 cases), and family cases accounted for 2.6% (171,671 cases). Focusing only on the 1,012,837 civil substantive cases filed, claims for damages were the most common at 18.4% (65,819 cases). This was followed by unjust enrichment claims (3.2%, 11,326 cases), contract claims (2.2%, 7,859 cases), lease deposit claims (1.6%, 5,755 cases), debt non-existence confirmation (1.6%, 5,650 cases), dividend objections (0.8%, 2,704 cases), and guarantee debt claims (0.3%, 1,165 cases), in that order.