Debt among South Korean youth is on the rise, and investing in cryptocurrencies is leading many desperate young people to bankruptcy court, new data reveals.
According to the Hankyoreh, on April 5, the Seoul Rehabilitation Court released a report on debt-related cases for fiscal year 2023.
The report's authors pointed out that in 2023, there was a 31% increase in “individual rehabilitation” applications.
The authors pointed out that “cryptocurrency investments” and “stock market purchases” are causing the increase in the number of infections among people aged 20 to 29.
South Korean youth: Will virtual currency investment not go well?
The Seoul Bankruptcy Court compiles a statistical survey report on personal rehabilitation and bankruptcy cases every year.
This year's report showed 19,379 people filed for rehabilitation or bankruptcy in fiscal year 2022, up from 14,826 in fiscal year 2022.
In South Korea, the rehabilitation system allows individuals who are unable to repay their debts to avoid legal bankruptcy if they agree to abide by a court-assigned debt repayment plan.
If you do not follow these plans, the court will proceed with bankruptcy proceedings.
The Seoul Bankruptcy Court noted that the number of individual rehabilitation applications by people in their 20s has been “steadily increasing” in recent years.
In the first half of 2021, 10.3% of rehabilitation applicants were between 20 and 29 years old. This figure rose to 11% in the second half of 2021 and 13.8% in the first half of 2022.
In the second half of 2022, this number rose to 16.6%, in the first half of 2023 to 16.8%, and in the second half of 2023 it reached 17%.
According to the court's analysis, this rise is “a result of the expansion of economic activity among people in their 20s, including cryptocurrencies and stocks.”
Court finds more young people are turning to cryptocurrencies
The same court issued a similar opinion in October 2023, holding that:
“increase [insolvency] Among young people, growth in economic activities such as investing in cryptocurrencies and the stock market seems to be having an impact. ”
Many blame rising real estate prices and high unemployment rates for the growing disillusionment among South Korea's youth.
1.74 million people will be forced by housing prices. Residents have been leaving Seoul since 2014 https://t.co/BoK79xR85q
— Korea Times (@koreatimescokr) February 6, 2024
Some say economic hope lies in the virtual currency market and overseas stock markets. Meanwhile, many financial advisors say buying cryptocurrencies is “no longer optional” for young South Koreans.
Earlier this year, Judge Lee Seok-joon of the Seoul Bankruptcy Court published a paper calling for stronger regulation of virtual currencies.
Lee argued that crypto investors need more protection. He concluded that with legislative oversight, courts are often powerless to provide this.
