With the economy in the doldrums for years and unemployment at a record high, Japanese are racking up debts, falling prey to loan sharks and declaring bankruptcy by the thousands.
Individual bankruptcies soared fivefold in the last five years to more than 214,600 last year, up 34 percent from the previous year, according to the Japanese Supreme Court. And experts say the nation's culture of shame about debts and overall ignorance about the law are a big part of the problem.
"Japanese people feel it's an obligation to pay back money they've borrowed. They're determined to pay it back even if it kills them," says Shigeki Kanamori, who gives legal advice to people struggling with loans gone sour.
Kanamori and other experts say the ballooning problem of broke borrowers has produced a booming business of illegal lenders, some linked with gangsters, who charge outrageous interest rates -- such as 1,800 percent a year, according to police -- and hound borrowers with threats to wring payments out of them.
"This business is a cash cow," Kanamori said.
Loan sharks are a growing menace in other parts of economically struggling Asia as well. Malaysia's Parliament is considering tough new laws against illegal money lenders following a spate of suicides by hopelessly indebted people.
Japanese police say 446 people were arrested last year on charges of operating illegal lenders, but the arrests are believed to be a just small portion of the rampant crime. The Tokyo police have set up a special team to crack down on "yami-kinyu" or "racket lenders."
In most cases, the victims are average, honest, hardworking people. A "salaryman" worker or a housewife, they usually start out borrowing a small amount of money to keep up with mortgage payments or bills. But once they miss a payment, they get ensnared in the trap of owing more and end up turning to other dubious lenders -- only to find themselves deeper in debt. Lenders can legally charge up to 29 percent interest in Japan, but many exploit people's ignorance about the law and charge far higher interest, such as 50 percent over 10 days. In Japan, family ties tend to be strong and the nightmare of bad debts can spread to relatives, who often co-sign loans.
A 34-year-old Tokyo consultant, who asked that his name be withheld because he is worried about losing his job, had to declare bankruptcy when he found out that he had co-signed more than ?120 million (US$1 million) bank loans for his father's machinery business, which eventually went bust.
"First, there was absolutely no way I could pay that kind of money," he said. "I learned you can't trust even your own father."
This country was once a stranger to bad debts. In 1990, individual bankruptcies totaled a mere 10,000 a year. Although corporate bankruptcies have also been on the rise in Japan, as the decade-long stagnant economy drives companies into losses, individual bankruptcies account for 95 percent of bankruptcies filed last year.
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