By Lee Jin-woo
Staff Reporter

The number of applicants for personal bankruptcy surged to 3,759 in the first half of this year, as credit defaulters approached the 4 million mark amid the prolonged economic slump.
According to statistics released by the Supreme Court on Sunday, a total number of 3,759 people with financial difficulties filed for bankruptcy with the court in the first half of this year.

The figure marks a sharp rise, compared with the annual record high of 3,856 for the whole of 2003.

And the number of applicants is expected to set a new record high.

Some analysts predict that over 10,000 credit defaulters will declare bankruptcy by the end of this year.

By region, Seoul came top with 2,497 or 66.4 percent of the total, followed by Taegu with 304, Inchon with 177, Suwon with 157, Uijongbu with 127 and Pusan with 96.

Since March 1997, when the first individual bankruptcy case was reported in Korea, the number has risen sharply.

The individual bankruptcy system was actually inactive until 1997, when the country was hit by the Asian financial turmoil, although it was first introduced in 1962.

The court also allowed a growing number of applicants to be exempted from their debt.

In the first half of this year, the court completed its review of 1,411 of the total applicants and allowed 1,381 applicants or 95.8 percent of the total, to enjoy court protection.

The percentage has been steadily risen from 58 percent in 2000, 68 percent in 2001, 77 percent in 2002 and 89.5 percent in 2003.

``A growing number of court officials think it is desirable to allow credit defaulters to be exempted from their debt obligations and thereby help them go back to a normal life,’’ an official at the court said.

``As for debt exemptions, judges now show a more positive attitude toward allowing them to be saved from debt.’’

For instance, a woman, identified as Song, 33, with her nine-year-old daughter was exempted from debts after her husband committed suicide due to some 900 million won in debts. The court decided to give her another chance to live a new life with her little daughter through the bailout.

Despite the surging number of individual bankruptcy cases, the court pointed out that for the size of the population and economy, there should actually be more cases.

At the end of last year, the total number of applications for individual bankruptcy accounted for less than 0.1 percent of the 3.7 million defaulters.

Japan, which has a similar judiciary system to Korea, showed 55 times more application cases than its neighboring country last year. The U.S. showed an even greater difference with 421 times more cases than Korea.

As the public awareness of the individual bankruptcy system has increased and the personal workout system is scheduled to launch in September, it is expected more people will take the chance to restore their credit rating by making use of the individual bankruptcy system.

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