Household debt
Debt of Japanese households accounted for 68.8 percent of the GDP in 2021. The ratio of household debt to GDP was slightly lower than the average in advanced economies despite having gradually increased over the past years. Outstanding household debt as a percentage of disposable income rose to 121.58 percent in the same year.The total household debt in Japan amounted to 378.6 trillion yen in 2022. Housing loans, which account for the largest share of household debt, increased to 224.9 trillion yen. In contrast, outstanding consumer loans, which comprise credit card loans and education loans, were much lower at 48.7 trillion yen. The average liabilities of a multi-person household amounted to 5.76 million Japanese yen. Household debt was higher among younger people, with under 40-year-olds showing the highest level of indebtedness.
Multiple debt problem in the early 2000s
The term multiple debt describes a situation where an individual has difficulties paying back their debt borrowed from several lenders. In the early 2000s, excessive borrowing at high interest rates and the aggressive debt collection practices of legal non-bank money lenders and illegal loan sharks (Yamikin) became a social problem in Japan. This was reflected in rising amounts of unsecured loan debt and high numbers of filings for personal bankruptcy.An amendment to the Money Lending Business Act, which came into force in 2010, put a limit on the amount individuals could borrow and capped interest rates. The new regulations resulted in an immediate drop in filings for personal bankruptcy. The same trend was observed in the number of filings for personal debt rehabilitation, a procedure for reducing and restructuring personal debt which offers debtors to retain ownership of their homes.
