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The real cost of household debt

Oct 14,2019
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HAN AE-RAN
The author is a financial team reporter of the JoongAng Ilbo.

There hasn’t really been a time in the last 20 years when household debt wasn’t an issue. A conference three years ago discussed household debt. While debt was rapidly increasing, it wasn’t on a level that undermined financial stability. A lecturer’s closing statement from that conference really stuck with me.

“Is it okay as long as a financial crisis does not come? What if people struggling under mountains of debt start jumping into the Han River? Does that make it a major social issue?”

It was refreshing that somebody was willing to consider the lenders, not just the fate of banks.

In 2019, household debts are still a serious issue, but the focus has changed. The rate of increase has slowed thanks to loan regulations, and we don’t have to worry about interest rates rising drastically, for now. So is the situation stable?

In May, an unemployed couple in their 30s were found dead in their car with two children in Siheung, Gyeonggi. That same month, a man in his 50s was found dead with his wife and daughter in an apartment in Uijeongbu, Gyeonggi. In September, a man in his 40s killed his wife and two children, aged nine and seven, before killing himself. On Oct. 1, a couple killed themselves, leaving behind two sons in elementary school.

All of these people were struggling with large amounts of debt.

Adding to the tragedy is the fact that there is little evidence of organized moves by the government to stop this human cost.

I can guess why. The deaths and killings of families in debt are considered personal problems. It is hard for the police to investigate these cases because the people are dead and their bereaved families often don’t want to talk about financial issues. Repeated tragedies don’t make a social issue that requires a government-level responses.

It is even unclear which ministry is responsible. Debt falls under the Financial Services Commission, and the welfare system is under the Ministry of Health and Welfare. Personal debt relief and bankruptcy are under the Justice Ministry. Businesses closing is under the Ministry of Economy and Finance or the Ministry of Employment and Labor.

So I think the Blue House needs to come forward to save families with debt. It is the government’s job to save families on the edge. There is no state administration task more important and urgent than saving lives. I hope for a word from the president to make a special measure to prevent these tragedies.