South Korean youth debt is on the rise, with crypto investments leading many desperate young people to bankruptcy courts, new data shows.
Per Hankyoreh, on April 5, the Seoul Rehabilitation Court released a report on debt-related cases for the Financial Year 2023.
The report’s authors noted that there had been a 31% rise in “personal rehabilitation” applications in FY2023.
The authors noted that “crypto investment” and “stock market purchases” were driving a rise in case numbers for people aged 20-29.
South Korean Youth: Crypto Investments Going Wrong?
The Seoul Bankruptcy Court compiles an annual Personal Rehabilitation and Bankruptcy Case Statistical Survey report.
This year’s report showed that 19,379 individuals applied for rehabilitation or bankruptcy in FY2022, up from 14,826 in FY2022.
In South Korea, the rehabilitation system lets individuals who cannot repay their debts avoid legal bankruptcy if they agree to stick to court-assigned debt repayment plans.
If they fail to adhere to these plans, courts process bankruptcy protocols.
The Seoul Bankruptcy Court noted that personal rehabilitation applications for people in their 20s have “steadily increased” over the past few years.
In the first half of 2021, 10.3% of rehabilitation applicants were aged 20-29. That number rose to 11% in the second half of 2021, then to 13.8% in the first half of 2022.
In the second half of 2022, the figure rose to 16.6%, climbing to 16.8% in the first half of 2023, and reaching 17% in the second half of 2023.
Per the court’s analysis, that rise is “the result of the expansion of economic activities for people in their 20s, including cryptocurrency and stocks.”
More Young People Turning to Crypto, Court Finds
The same court made similar observations in October 2023, when it claimed:
“A rise in [insolvency] among young people seems to have been influenced by a growth in economic activities such as cryptocurrency and stock market investment.”
Many have blamed rising property prices and high unemployment rates for rising South Korean youth disillusionment.
Housing prices force 1.74 mil. residents to leave Seoul since 2014https://t.co/BoK79xR85q
— The Korea Times (@koreatimescokr) February 6, 2024
Some say their only financial hopes lie in the crypto and overseas stock markets. Meanwhile, many financial advisors say crypto buys are “no longer optional” for young South Koreans.
Earlier this year, Judge Lee Seok-jun of the Seoul Bankruptcy Court published a paper calling for more crypto regulation.
Lee claimed that crypto investors need more protection. He concluded that courts are often powerless to provide this due to legislative oversights.
