One in five households in Korea is in deficit because of crippling debt, according to a study by the Korea Development Institute released Sunday.

"Analysis of a 2011 study on household finances by Statistics Korea showed that 33 percent of indebted households were in deficit, with liabilities surpassing assets at 7 percent," the KDI said.

Given 63 percent of 17.57 million households in Korea in debt as of 2010, 3.65 million households are in the red because of their liabilities.

The KDI added that 3.3 percent of households, or 360,000, had more liabilities than assets. Low-income households were particularly stricken. "The slump in the real estate market has made it tough to sell assets and indebted households in deficit can fall into a vicious cycle of taking out more loans to make ends meet," said Prof. Ha Joon-kyung at Hanyang University