코리아타임즈 Soaring Bankruptcy Applications

Soaring Bankruptcy Applications        Government Should Actively Use Relief System

The record number of 3,759 bankruptcy filings in the first six months of the year reflects the unprecedented financial crises faced by individuals during the current prolonged recession. Although the system was introduced in 1962, the first filing was made as recently as the late 1990s. Now, however, not only the working poor but also middle-class professionals are filing for bankruptcy, indicating the increasing difficulty to make ends meet even among formerly well-to-do people. Of course, the sharp increase in bankruptcy filings is attributable to debtors' belated awareness of the system. But it also clearly points to the explosive rise in the number of households thrown into marginalized situations in the increasingly polarized economy with the rich getting richer and the poor getting poorer. With the number of credit delinquents now approaching 4 million, almost 10 percent of the population suffers from restrictions in economic activities of one form or another. Our society can ill afford to leave them on the verge of economic death. To do so would further damage the already feeble economy by sapping its vitality. The government needs to save them and let them start the recovery process. The system of individual bankruptcy offers an important means of relief for credit delinquents but only a small number of debtors have used it. It is desirable in this regard for the courts to actively allow both bankruptcy declarations and debt exemption. Still, individual bankruptcy and court protection have disadvantages as well. The debtors are relieved from debt repayment but creditors suffer losses and in the process, the former may be tempted to misuse the system. Some debtors even hide their assets and file for bankruptcy, and this should be sternly dealt with by the court. While remaining positive about permitting declarations of bankruptcy, the court also needs to conduct meticulous examinations beforehand. The financial situation of working-class families is said to be worse than even during the 1997-98 currency crisis. For instance, 634,000 households experienced the cutting of power supply last year, up 41 percent from 2002, due to their failure to pay electricity bills for three months or longer, while 1.6 million families have been in arrears for medical insurance fees for more than three months. Household debts are not the result of extravagance but just arise from everyday living costs. With the economy remaining structurally weak for the time being, the number of individual bankruptcies is likely to increase at an enormous rate. The government had better prepare for hundreds of thousands of bankruptcy filings in the long run, as is the case in some advanced countries. It needs to enlighten both credit defaulters and their neighbors that the system is not for bringing debtors to ruin but for resurrecting them and returning them to their normal lives. 08-09-2004 18:47