Loan advertisements are seen in Seoul on July 22, 2025.NEWS1
Nearly 30,000 people in Korea have reapplied for debt restructuring this year after previously receiving debt relief. This has raised concerns over a growing cycle of debt as financially vulnerable borrowers struggle to stay afloat amid the prolonged economic slowdown.
A total of 27,864 people reapplied for debt restructuring between January and August this year, according to Credit Counseling and Recovery Service data submitted to People Power Party's Rep. Lee Jong-wook, a member of the National Assembly’s Finance, Economy Planning and Budget Committee, on Monday. The figure already amounts to 82.6 percent of the 33,718 repeat applicants recorded for all of last year.
The overall number of debt restructuring applicants has also risen each year, from 138,202 in 2022 to 209,060 last year.
By age, 4,745 repeat applicants were in their 60s or older, 93.1 percent of last year’s total for the age group. Those in their 40s and 50s totaled 15,750, or 82.6 percent of last year’s figure.
Repeat applications among younger people in their 20s and 30s have also continued to rise since 2022 and reached 7,369 through August this year, or 77.2 percent of last year’s total.
The figures point to a deepening cycle of debt across all age groups. Under the Credit Counseling and Recovery Service’s debt restructuring program, borrowers may reapply if their previous repayment agreement is terminated after they miss four or more payments or if they take on new debt after fully repaying their restructured debt.
Experts say debt restructuring alone has limitations in helping borrowers achieve financial independence and should be accompanied by measures that lead to meaningful improvements in income. Even after borrowers receive temporary relief from their debt, some find themselves struggling financially again within months.
There is also criticism that repeated debt relief could encourage moral hazard.
“It inevitably leaves borrowers who faithfully repay their debts feeling deprived,” Rep. Lee said. “Authorities should thoroughly review whether applicants complied with their previous debt restructuring agreements and examine any new debt so that responsible borrowers do not feel they are being put at a disadvantage.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
