Recent legislative changes have reinforced the importance of negotiation and the use of appropriate conflict resolution methods to improve credit recovery and the orderly and rational use of the courts.
There is a consensus that a large part of the Brazilian population, especially the low-income population, is excessively indebted. As a result, debts are collected in a disorganized and unreasonable manner.
Although Brazilian law has, in the past, provided for civil insolvency, the current Code of Civil Procedure has not dedicated an article or chapter to this.
Despite this, and mindful of the phenomenon of over-indebtedness among Brazilian families, the legislator saw fit to introduce some changes to the law in force, by means of Law No. 14.181/21, which amended the Brazilian Consumer Code and the Elderly Statute.
On the basis of these changes, an individual can go to the Court to settle all outstanding debts involving different creditors, proposing, with the participation of all, a payment plan.
In order to provide guidance to the general population and also to legal practitioners, the National Council of Justice has issued a guide on the treatment of consumer over-indebtedness. Its content points out ten paradigm principles followed by the law, among which it is worth mentioning:
- Consumer financial and environmental education: item IX of art. 4 of Law no. 14.181/2021 mentions the need to “promote actions aimed at the financial and environmental education of consumers”.
- Combating social exclusion: over-indebtedness causes not only the economic exclusion of the individual, but also their social exclusion, preventing them from interacting and acting in society. Thus, dealing with the over-indebted not only means reinserting them into the country’s economic life, but also reintegrating them into the community.
- Preventing over-indebtedness: excessive indebtedness is an evil that plagues society today. In order to combat it, not only the state, but everyone must make their contribution through healthy practices. Thus, the law reinforces the duty of information and advertising (article 52 of the Brazilian Consumer Code) and measures to prevent abuse and fraud in the granting of credit (articles 37 and 39 of the CDC), introducing the notion of “responsible credit” (articles 54-A to 54-G), making it possible to deal with over-indebtedness (extrajudicially and judicially), to protect natural person consumers in particular.
- Preservation of the existential minimum: in order to give concrete expression to the guarantee of human dignity, Decree no. 11.150 of July 26, 2022 was issued, which states: “within the scope of the prevention, treatment and administrative or judicial conciliation of situations of over-indebtedness, the existential minimum is considered to be the monthly income of the natural person consumer equivalent to twenty-five percent of the minimum wage in force on the date of publication of this Decree” (according to art. 3).
Authored by: Marco Lorencini
