In South Korea, the rising trend of youth debt is a concerning issue, as many young people are turning to risky investments in cryptocurrencies and the stock market, leading them to bankruptcy courts. The Seoul Rehabilitation Court’s report for Financial Year 2023 showed a 31% increase in “personal rehabilitation” applications, with crypto investments and stock market purchases being cited as major contributors to the rise in case numbers for people aged 20-29. The court’s analysis revealed a steady increase in personal rehabilitation applications from individuals in their 20s over the past few years, with 17% of applicants falling in this age group in the second half of 2023.
The Seoul Bankruptcy Court’s annual Personal Rehabilitation and Bankruptcy Case Statistical Survey report highlighted a significant increase in the number of individuals applying for rehabilitation or bankruptcy in FY2022 compared to previous years. The rehabilitation system in South Korea allows individuals who cannot repay their debts to avoid legal bankruptcy by adhering to court-assigned debt repayment plans. However, failure to comply with these plans may result in bankruptcy protocols being processed by the courts. The court’s data indicates that the rise in personal rehabilitation applications from young people is likely influenced by their participation in economic activities such as cryptocurrency and stock market investments.
Amidst the rising trend of youth debt and bankruptcy cases in South Korea, some attribute these issues to factors like the escalating property prices and high unemployment rates, which have left many young people disillusioned. The Korea Times reported that housing prices have compelled 1.74 million residents to leave Seoul since 2014, reflecting the challenges faced by individuals in maintaining financial stability. As a result, some young individuals view crypto and overseas stock markets as their only financial hope, as traditional avenues may not offer the same level of returns. Financial advisors have emphasized the importance of crypto investments, stating that they are no longer optional for young South Koreans looking to secure their financial future.
In light of the increasing number of young people turning to crypto investments and facing financial challenges, Judge Lee Seok-jun of the Seoul Bankruptcy Court has called for more regulation in the crypto market to protect investors. Lee highlighted the lack of legislative oversight that hinders the court’s ability to provide adequate protection for crypto investors who may find themselves in financial distress. The court’s observations underline the critical need for regulatory measures to safeguard individuals, especially young investors, from the risks associated with volatile investment options like cryptocurrencies. As the economic landscape continues to evolve, it is essential to address the factors contributing to rising youth debt and bankruptcy cases to ensure the financial well-being of the younger generation in South Korea.
