Personal debt is overwhelming an increasing number of Japanese as higher interest rates and the rising cost of living bite. Consumer loans are rising at the highest rate in 16 years. Household borrowing exceeded incomes for the first time last year. And government officials are worried that many people accustomed to rock-bottom rates will struggle with their mounting loans.
While Japan is by no means alone in confronting a debt problem, salaries are the lowest of Group-of-Seven countries, and the central bank is raising borrowing costs while its peers cut them.
Lawyers estimate that personal bankruptcies—already the highest since the pandemic—are on track to reach the most since 2012 this year. And in a tragic turn, suicides related to debt are also climbing.
The problem is all the more remarkable given that the country is better known for savers stashing cash under the mattress rather than piling into debt.
Yet average household debt rose to ¥6.55 million (about 769,000) in 2023, higher than incomes, government data showed.
Take the case of a Tokyo-based medical worker who filed for personal bankruptcy last year after her consumer loans reached about ¥11 million.
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