Why it matters. South Korea is a wealthy, highly educated economy, yet a generation of its young people is sliding into debt-driven insolvency — a warning sign about how rising household debt and a tough job market can trap even diligent strivers in advanced economies.
Background. South Korea has some of the world's highest household debt relative to income. 'Jeonse' is a uniquely Korean housing system in which tenants pay a large lump-sum deposit (often tens of thousands of dollars, frequently financed by loans) instead of monthly rent; landlord defaults and deposit fraud have become a major scandal. 'Tip rooms' (리딩방) are chat groups, often on messaging apps, where operators sell stock and crypto trading 'guidance' that frequently amounts to fraud.
What to watch next. Watch whether the book's nine policy proposals gain traction with lawmakers as youth debt becomes a growing political issue ahead of South Korea's electoral cycles.
A new Korean book by a debt-relief lawyer argues that a surging wave of bankruptcies among South Koreans in their 20s and 30s stems not from reckless spending but from a flawed financial system — and it calls for wider use of the country’s debt-rehabilitation laws to give these young people a second chance.
Titled Youth Bankruptcy and carrying the subtitle “People Who Failed Despite Doing Everything Right,” the book was reviewed by the Hankyoreh, a major left-leaning South Korean daily. Its author is a lawyer who began working with homeless people during university, discovered that most had been driven onto the streets by debt, and became an attorney to help them.
From the Streets to the Classroom
The lawyer specializes in debt rehabilitation and bankruptcy cases, as well as voice-phishing scams and fraud. (“Voice phishing” is the common Korean term for phone-based financial scams, a persistent problem in the country.) After 2020, a clear trend emerged: university students and young adults were increasingly seeking help.
To illustrate the pattern, the author builds composite characters from real cases. There is the graduate who took on more than 60 million won (roughly US$44,000) in debt — through tuition loans, living-expense loans, and small loans from second-tier lenders — only to find no job waiting after graduation. There is the young person lured into a stock and cryptocurrency “tip room” who ended up 50 million won in debt and tagged as a suspect under the Electronic Financial Transactions Act. And there is the newlywed couple who used a government-backed jeonse loan to secure a home, only to be defrauded.
Why These Cases Matter
Reading these stories, the author argues, makes the subtitle ring true: those knocking on the door of bankruptcy court are not spendthrifts but diligent people caught in a broken system.
Confronting the Myths
The book takes aim at widespread misconceptions about debt relief. To the objection that the state should not shoulder an individual’s debts, the author notes that more than 90 percent of creditors are large financial institutions, so taxpayers are not footing the bill. To the belief that debts must be repaid even at the cost of starvation, the author counters that the interest banks charge is essentially an insurance premium priced in against the risk of default.
Statistics underline a structural problem. The debt-to-income ratio among young Koreans has climbed sharply, and among all age groups, only households headed by people under 40 saw their average assets shrink — by 6 percent.
A Roadmap for Reform
The final section offers nine policy proposals tied to the debt-rehabilitation and bankruptcy system. An appendix lays out the institutional differences between rehabilitation, bankruptcy, and workout (debt-restructuring) procedures — a practical guide for readers trying to navigate their options.
The book’s central message is that South Korea’s legal framework already contains tools to help people recover, and that using them is not a moral failing but a path back to stability.
