In Japan, pressure builds on COVID-19 loan borrowers as repayments loom

May 09, 2022 | News On Japan

May 09, 2022 (Japan Times) - A single mother in her 40s with two children has been walking a financial tightrope since she lost her job at a restaurant in the summer of 2020 amid the coronavirus pandemic.

At that time, she took out a government loan worth ¥2 million, the maximum amount allowed under a special program for people who have lost their income or had it reduced due to the pandemic. She now works at another restaurant, but with one of her children in university, she has been forced to dip into her savings to make ends meet.

“I keep worrying about how I will be able to pay back my loans,” said the woman, who lives in the Tokyo metropolitan area. “There are times when voluntary bankruptcy crosses my mind.”

According to a Kyodo News survey, among those who have taken out such a government loan, about 5,000 people have proceeded to apply for voluntary bankruptcy.

Since the start of the pandemic, the government has repeatedly loosened conditions and extended the loan application period in order to more quickly provide financial assistance to those in need.

But with loan repayments slated to start as early as January next year, there may be more people who need to file for voluntary bankruptcy in the coming months.

Under the existing program, households exempt from residence tax will not need to repay the loan. Those exempt from repaying the loan would be making, for instance, about Y1 million in annual income or less for a single-person household — a criteria not many people meet. ...continue reading

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