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South Korean households mired in debt

Published on Feb 6, 2013 12:29 PM
A scene of a traditional outdoor market in central Seoul on Tuesday. A mountain of household debt in South Korea, coupled with rising interest rate, is taking a toll on lives of ordinary and low-income families. -- PHOTO: AFP

SEOUL (AFP) - Mr Lee Sang Kuk delivers meat during the day and drives drunk businessmen home at night, but even with two jobs he and millions of other South Koreans are struggling against a tide of household debt.

Mr Lee's situation is increasingly common in South Korea where total household borrowing hit a record 937.5 trillion won (S1.07 trillion) in September last year, equivalent to more than 70 per cent of the country's 2011 GDP.

Laid off from his job in a media company in 2000, Mr Lee opened a restaurant with a bank loan using his home as collateral. Within two years the business had collapsed forcing him to apply for personal bankruptcy.

Mr Lee sold his house to clear the bank loan but then took out a high-interest loan from private lenders to fund the education of his son and daughter.

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