Self-employed people unable to repay loans...Individual rehabilitation applications increase by 2.7 times = South Korean report

Kwon (35), who had been running a delivery specialty store in Jungnang-gu, Seoul for two years, applied for personal rehabilitation at the Seoul Rehabilitation Court in September.
Ta. When the business was going well, it was recording sales of more than 20 million won (approximately 2.19 million yen) a month, but the situation took a sudden turn after the spread of the COVID-19 virus. social day
Due to the lifting of the stance measures, sales have decreased by 3 million won (approximately 328,000 yen) per month from February 2022. In addition, the amount borrowed from a savings bank to be used as living capital
The debt of approximately 90 million won (approximately 9.85 million yen), including debt, has snowballed. Kwon said, ``Interest rates on credit loans, which used to be in the 4% to 5% range, have recently risen to 14% to 15%, and as of June
I even had to pay interest in arrears,'' he said, adding, ``I also have to raise two children, so I am spending 3 million won a month just to breathe.'' Mr. Kwon is a day laborer.
He is currently awaiting approval for a repayment plan that will see him pay off his debt by 550,000 won (approximately 60,000 yen) a month over five years, with the remaining balance being cancelled.
A self-employed person with more debt than assets goes to court to have his debts canceled.
The number of cases of individuals applying for rehabilitation is rapidly increasing. For personal rehabilitation, make steady monthly repayments for a certain period of time (3 years in principle, 5 years as an exception), and if a certain amount is met, the remaining debt can be discharged.
It's a procedure. According to materials provided by the Seoul Rehabilitation Court on the 17th, the number of individual rehabilitation cases filed with the Seoul Rehabilitation Court from January to October this year was 20,458, of which self-employed
It was confirmed that there were 4,735 applications. There have been many indications that the number of applications for personal rehabilitation is increasing, but this is the first time that the specific number of applications for self-employed people has been confirmed.
It's my first time. By October of this year, the number of rehabilitation applications for self-employed people was already more than double the number in 2022. This is 2.7 times the size of the same period last year.
Of the individual rehabilitation applicants, 14,591 (71%) were salaried, and 1,132 (6%) had both business income and employment income. especially the self-employed
While the number of individual rehabilitation applications for salaried workers has increased rapidly by 2.7 times in one year, the number of individual rehabilitation applications for salaried workers has only increased by 20%. For this reason, the proportion of self-employed persons in the total number of personal rehabilitation applications has also increased.
By October of this year, it was 23%, nearly double the number a year ago. It has been analyzed that the ``COVID-19 loan aftereffects'' are in full swing behind the increase in personal rehabilitation applications by self-employed people.
In particular, there are concerns that the number of self-employed people like Mr. Kwon, who are forced into self-employment due to borrowing money, will increase rapidly. Shin Yong-sang, director of the Financial Risk Research Center at the Korea Financial Institute, said, ``The economy is improving.
They say things are improving, but this is a story about large companies that export semiconductors and other products, and domestic demand has not improved because they have no spending power due to household debts. person in turn
"We need government-led policies so that we can sort out our businesses." Research member Roh Min-sung of the Small and Medium Venture Business Research Institute said, ``Self-employed people who are structurally unable to continue their business any longer.''
It is important to support businesses to smoothly close down or change their businesses,'' he said, adding, ``Some studies show that closing costs alone can cost more than 10 million won (approximately 1.1 million yen).'' In addition, “business closing costs
``Consulting, education and training, and job mediation should be revitalized to support self-employed people who have gone out of business and find employment.''