Personal Bankruptcy Filing Rate Up 250% from 2006

The number of bankruptcies filed by individuals in the first quarter of this year rose to an all-time high, up 2.5 times from the figure recorded over the same period last year. Furthermore, March alone recorded more individual bankruptcy applicants than any other month.

According to the Ministry of Finance and Economy and the Supreme Court on Sunday, a total of 45,057 individuals filed for bankruptcy in the first quarter, up 2.5 times from 17,679 and 7.4 times from 6,080 over the same period in 2006 and 2005, respectively.

The number of personal bankruptcy filings in March alone reached 16,232, up 2.6 times from 6,197 last March. At the current pace, the number of personal bankruptcies is likely to exceed last year’s total of 123,691, setting a new all-time high.

Bank interest rates on new loans are also constantly rising, adding to household burdens.

Annual variable interest rates on housing loans imposed by Kookmin Bank this week increased by 0.05 percentage points from last week’s to an annual 5.78 to 7.38 percent. In addition, the maximum interest rate soared by whopping 0.13 percentage points over the past month.

According to the Bank of Korea, savings bank interest rates on new household loans, including housing loans as of the end of March, were 6.32 percent, up by 0.64 percentage points from the same period last year.

Meanwhile, the prices of raw and processed materials in April rose by 3.9 percent compared to a year before, hitting an eight-month-high since last August’s 7.1 percent increase.

The Hyundai Research Institute said in a report, “This year’s economic growth rate will fall by 0.09 to 0.15 percentage points due to high raw materials prices which have been on the steep rise since last September.” [via]