September 09, 2020 08:30
There has been a surge in bankruptcy filings across the country due to the coronavirus epidemic.
One administrator at the Seoul Bankruptcy Court said, "I handle around 20 personal bankruptcy cases a month and everyone tells me how tough the times are."
There are two types of bankruptcies -- liquidation and rehabilitation. The liquidation bankruptcy exempts individuals from liability for debts surpassing their assets, while the rehabilitation bankruptcy reorganizes debts down to the payable level so people can pay them off within three years as they try to get back on their feet.
Many more applicants file for liquidation since they can see no prospect of their situation improving. The number of liquidation filings nationwide rose from 3,945 cases in April to 4,895 in July, while rehabilitation filings were more or less stable at 7,502 in April and 7,201 in July.
At the Seoul Bankruptcy Court alone, liquidation filings recently exceeded 1,000 for the first time since the court opened in 2017. Most of them were filed by small business owners hit the hardest by the epidemic.
One 30-year-old who had run a franchise outlet since 2016 filed for liquidation in July. He had been borrowing to stay in business since 2017, but the sharp decline in customers due to the epidemic was the final nail in the coffin.
Many others are workers who lost their jobs. One woman in her 60s used to work in restaurants and supermarkets until the epidemic broke out and had credit-card debts totaling W50 million, which she was able to pay back incrementally while she was employed. But once she lost her job, there was no way to pay back the money.
"I think this is just the tip of the iceberg," the court official said.
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