"Even Earning 3 Million Won a Month, Can't Repay"... The Fate of 'Yeongkkeuljok'

Middle Class Debt Restructuring Applications Up, Low-Income Down
Aftermath of Prolonged High Interest Rates and Real Estate 'Yeongkkeul'

This year, the number of people applying for 'personal debt adjustment' due to failure to repay their debts on time has significantly increased. The number of middle-class applicants earning more than 3 million won per month has also risen sharply compared to the previous year. As the high-interest rate trend prolongs, concerns are emerging that the household debt crisis is becoming a reality due to the increased interest burden on the middle class.

According to data received on the 29th from the Credit Recovery Committee (Shinbokwi) by Rep. Yoon Young-deok of the Democratic Party of Korea, among personal debt adjustment applicants from January to July, 11,600 people earned more than 3 million won per month, surpassing last year's 11,435.

As the high interest rate trend prolongs and the middle class's interest burden increases, there is growing concern that the national economy may be endangered by household debt.
[Photo by Yonhap News]

Personal debt adjustment is a system in which the Credit Recovery Committee supports people who have too much debt to repay normally by changing repayment conditions through methods such as extending the repayment period, installment repayment, interest rate adjustment, repayment deferral, and debt reduction, enabling them to recover economically.

Among personal debt adjustment applicants, those earning more than 3 million won per month accounted for 10.8% of the total. This figure rose by 2.5 percentage points compared to the previous year and has more than doubled since 4.5% in 2020.

On the other hand, applications for personal debt adjustment from low-income groups have decreased. The number of applicants earning less than 1 million won per month was 42,100 in 2020, 40,100 in 2021, and 30,800 in 2022. From January to July this year, 17,700 people applied.

The increase in personal debt adjustment applications from the middle class is interpreted as the aftermath of real estate 'Yeongkkeul' investments amid prolonged high interest rates. It is analyzed that the interest burden of the middle class, who recklessly borrowed money to buy houses or invest during the period when the base interest rate fell to the 0% range in 2020-2021, has recently expanded sharply.

Meanwhile, major countries worldwide, including the United States, are not lowering their base interest rates, so the high-interest rate period is expected to continue for some time. Experts are calling for government measures to address household debt.