[Debt-ridden Twilight①] Highest Increase Rate in Debt Adjustment and Bankruptcy Among Those Aged 60 and Over

Aftermath of Prolonged COVID-19... Elderly Suffer Under Debt Burden
Debt Restructuring Among Seniors Aged 60+ Increased Most Last Year
Highest Growth Rate in Personal Bankruptcy Filings Across All Age Groups

#Lee Hee-ae (62, pseudonym) faced difficulties with her clothing store due to the impact of COVID-19. As customers became scarce, she eventually closed the store last year. After closing the clothing store, Lee started a new business running a dyeing shop to make a living, but even this did not generate the expected profits. Ultimately, she covered the rent with her deposit and was left with nearly 100 million won in debt borrowed from various sources, leading her to file for bankruptcy.

Due to the prolonged effects of COVID-19, many elderly people in retirement are suffering under heavy debt burdens. Last year, debt restructuring among those aged 60 and over increased the most compared to all other age groups. The rate of personal bankruptcy filings was also the highest in this age group.

According to data on 'Debt Restructuring Status Over the Past 5 Years' obtained by Asia Economy on the 11th through the office of Jin Sun-mi, a member of the Democratic Party of Korea, the number of confirmed debt restructuring cases last year was 113,863, a 1.7% decrease from the previous year. However, confirmed debt restructuring cases among those aged 60 and over reached 15,751, a 10.8% increase from the previous year, marking the steepest growth compared to other age groups. The debt restructuring program operated by the Credit Recovery Committee helps debtors who are struggling to repay their debts by reducing the debt or extending the repayment period to enable repayment. 'Debt-Burdened Twilight'

Looking at the data by age group, confirmed debt restructuring cases decreased in all age groups except for those in their 60s and 20s. For example, the number of cases in their 30s was 24,153, down 6.2% from the previous year. Those in their 40s numbered 32,793, and those in their 50s numbered 28,088, both down 6% compared to the previous year. Confirmed cases among those in their 20s increased by 2.3% to 13,078. The total amount of debt forgiven was approximately 3.4818 trillion won, a 13.7% increase from the previous year (3.006 trillion won). The average debt forgiveness per person was 30.58 million won, also up 15.1% from the previous year (25.96 million won).

The number of personal bankruptcy filings among the elderly aged 60 and over also reached 17,236 as of the end of last year. Among them, 13,680 were in their 60s, and 3,556 were aged 70 or older. This represents an 11% increase from the previous year. This contrasts with other age groups from their 20s to 50s, where bankruptcy filings decreased by about 3-18% compared to the previous year. According to the legal community, as the economy worsens and the government plans to end loan extensions and repayment deferrals for small business owners affected by COVID-19 in September, consultation inquiries are increasing. Attorney Kim Bong-gyu of Moon & Kim Law Firm said, "In the past, elderly bankruptcies were often filed to avoid passing debts onto their children, but recently, due to business difficulties caused by COVID-19 and other factors, the number has been rising."

In particular, retirees in their twilight years showed a trend of struggling more with debt as their income decreased or disappeared. Last year, bankruptcy filings among those aged 60 and over reached a record high. While other age groups showed fluctuations year by year, bankruptcy filings among those aged 60 and over have been setting new records annually: 10,840 in 2017, 11,223 in 2018, 12,606 in 2019, and 15,570 in 2020, showing a steady increase each year.

Representative Jin said, "The number of elderly people struggling with debt in their old age is increasing," adding, "It is necessary for the government to prepare detailed measures to prevent elderly people from falling into blind spots."