South Korean Youth Drowning in Debt, Lawyer Warns in 'Youth Bankruptcy'

Young Koreans are increasingly facing financial ruin, a crisis detailed in lawyer Park Ki-tae's book, 'Youth Bankruptcy.' Park, who has been involved in activities supporting the homeless since his university days, became a lawyer to aid those driven to the streets by overwhelming debt. Focusing on rehabilitation, bankruptcy, and fraud cases, he observed a significant trend since 2020: a rise in consultations from university students and young adults.

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Most homeless people ended up on the streets because they were overwhelmed by debt.

'Youth Bankruptcy' chronicles the economic collapse of the younger generation, advocating for their relief through the Debtor Rehabilitation and Bankruptcy Act. The book introduces fictionalized young individuals whose specific situations illuminate the systemic pitfalls they encounter. One character, after graduating with loans for tuition and living expenses, faces unemployment and accumulates over 60 million won (approximately $43,000 USD) in debt through youth sunshine loans and second-tier financial institutions. Another falls victim to a stock and virtual asset "reading room," incurring 50 million won in debt and facing charges for violating electronic financial transaction laws. A young couple secures a government-supported new-home loan only to be defrauded. These composite characters, synthesized from real cases, underscore the book's subtitle: "People who diligently went bankrupt."

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People who diligently went bankrupt.

Those seeking bankruptcy and rehabilitation are not depicted as wasteful or irresponsible but as victims ensnared by flawed systems despite their diligent efforts. The book addresses common misunderstandings about these legal processes, such as the notion that national funds should not cover individual debts or the unwavering belief that all debts must be repaid, even at the cost of starvation. Park counters these by explaining that over 90% of creditors are large financial institutions, thus not burdening taxpayers. He also clarifies that loan interest rates set by banks essentially function as an insurance premium against the possibility of borrower bankruptcy.

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Over 90% of creditors are large financial institutions.

Statistics reveal a stark reality: the debt-to-income ratio among young people has surged, and the average assets of households headed by individuals under 30 have decreased by 6%. These figures highlight the structural problems pushing the younger generation toward bankruptcy. The latter part of the book offers nine policy proposals related to rehabilitation and bankruptcy, along with an appendix clarifying the distinctions between rehabilitation, bankruptcy, and workout programs.

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The interest rates set by banks are essentially a type of insurance premium in preparation for the debtor's bankruptcy.