From heart-broken to broke? Japan divorce loan helps

TOKYO, Oct 1 (Reuters) Japan's first-ever divorce loan caters to those who fell head over heels in love only to find themselves up to their necks in debt.

Named ''Re'' for those re-starting their lives, the loan helps divorcees cover the cost of compensation and legal payments and offers a lower interest rate than credit cards loans, on which Japan's growing number of divorce-seekers have depended in the past.

''It's not that we are recommending divorces,'' said Yoshimi Aoki, spokesman for Ogaki Kyoritsu Bank, based in Gifu, central Japan, which offers the loan.

''But we want people to feel more comfortable in visiting banks to consult on these issues,'' Aoki added.

While Japan's divorce rate is still low in comparison with the United States and Europe, failed marriages have been on the rise in recent years.

In 2006, there were two divorce cases for every 1,000 people, up from 1.7 cases in 1996, according to government data.

The divorce rate in the United States was 3.6 per 1,000 total population in 2005, while in Russia it was 5.5 and 2.8 in the United Kingdom in 2003.

In Japan, divorcees found responsible for the failure of their marriage -- for example, because of their unfaithfulness -- on average have to pay 35,000 dollars in compensation to their former partners, according to the Mainichi Newspaper.

Aoki said that in the past, Japanese divorcees have often sought to pay off divorce debts with consumer finance loans or credit card loans, which tend to have annual interest rates of 15-20 per cent.

But with the newly launched divorce loan, divorcees can borrow up to 43,000 dollars, paying a floating interest rate that stood at 5.8 per cent today.

REUTERS SKB HS1446