South Korea's worsening credit conditions are visible in both illegal-lending complaints and formal insolvency filings. The Financial Supervisory Service received 10,037 reports and inquiries about illegal private lending in the first half of 2026, putting the year on pace to exceed the 17,538 cases recorded in 2025, while excessive-interest complaints reached 3,199 and investigation referrals totaled 398. Separately, corporate bankruptcy filings reached a first-half record of 1,299, up 17.7% from a year earlier and already above the 1,069 recorded during all of 2020. Personal bankruptcy filings rose 10.3% to 21,899, and individual rehabilitation filings increased 13.2% to a record 81,723. SME loan delinquencies reached 1.00% at the end of May, their highest level in 11 years, while small-business sentiment weakened. Analysts and industry groups say declining sales, weaker operating profits, high interest costs and existing debt burdens are undermining repayment capacity, increasing the need for policy financing, maturity extensions, repayment deferrals, debt restructuring and stronger safeguards for vulnerable borrowers.