The nation`s personal bankruptcy filings hit a record high in the first half of the year due to the ongoing economic slowdown and softened bankruptcy rules.

The number of new personal bankruptcy cases approached 50,000 for the first six months, up some 260 percent from a year ago, according to data released by the Supreme Court and financial regulators.

The figure was even larger than the 38,773 reported for the whole of last year.

Experts accused easier legal processes which prompt financially distressed debtors to seek voluntary bankruptcies at courts.

Nearly all of bankruptcy applicants currently get their debt dissolved in the court, compared to less than 60 percent in 2000.

As the debt rescheduling program becomes increasingly demanding and stringent for credit delinquents, they turn their gazes into the easier and faster ways of slashing their entire debt burden.

Surging interest rates and a poor job market also fueled a rise in bankruptcy filings, industry watchers said.

As the central bank has made borrowing costs more expensive in a move to fend off rising inflation, debtors find it increasingly hard to repay their loans.

The Bank of Korea has raised its benchmark interest rate by 1 percentage point to 4.25 percent since October.

This is largely in line with global central banks` pre-emptive moves to curb inflationary pressures arising from soaring oil prices and excess liquidity.

The poor job market also made low-income debtors more dispirited over debt redemption.

While the government expects the economic rebound to create around 400,000 new jobs this year, the year-on-year job increase still hovers around 300,000 in the first half of the year.

Asia`s third-largest economy grew 5.3 percent in the second quarter from a year earlier, but its quarterly growth was 0.8 percent, the lowest in five quarters, due to a sharp slide in construction activities.

This stoked concerns that the economy may face a downturn earlier than expected.

(kkt@heraldm.com)





By Ko Kyoung-tae