Put: Leonardo Neri
The new Over-Indebtedness Law has as its main pillar the increase in protection for people with large amounts of debt, who in turn are unable to pay them off, and can therefore be renegotiated with all creditors simultaneously. Furthermore, financial institutions are prohibited from carrying out any type of action that entices customers.
The new rule came into effect in July, amending the Consumer Protection Code (CDC) and establishing numerous measures to prevent large-scale debt. The rule of Law No. 14,181/21 is to enhance the protection of debtors, mainly by creating instruments that aim to contain abuses by monetary groups, especially loans, among others.
In practice, the main changes are: (i) fairer negotiation conditions for those taking out credit; (ii) judicial recovery; (iii) guarantee of the 'existential minimum'; (iv) transparency; (v) end to customer harassment and financial education.
Regarding credit agreements, Ione Amorim, economist and coordinator of the finance program at the Consumer Defense Institute (Idec), states, “Today, each institution does as it pleases, welcomes consumers in any way, makes unfavorable agreements for those who are in debt. This will change.” In addition, Idec also presents data showing that consumers, in an attempt to settle their debts, end up taking on new ones. Consumer security, in this regard, is provided by the prohibition of advertisements for loans of the type 'without consulting the SPC' and the lack of assessment of the financial situation of the contracting party.
Judicial recovery, as already seen, is the permission to renegotiate debts with all creditors, and the debtor may take legal action, initiating a process to review contracts and present a payment plan (maximum period of 5 years). If an agreement is not reached, the Judge may determine a mandatory judicial plan for the consumer and their debtors (with term, amount and form of payment).
The 'Existential Minimum' guarantee prevents consumers from taking on new debts in order to cover basic expenses, such as water and electricity. "The idea is not to encourage default, but rather to pay off the debt with part of the remuneration, without exploiting the debtor," says Ione.
For the sake of transparency, the law prohibits banks from hiding the real risks of taking out loans. If the bank fails to do so, according to Idec, it is considered an illegal practice, and the consumer must claim their rights.
Harassment and pressure on customers is now illegal for Idec, that is, anyone who feels pressured must report it to the bank, directly to the manager or at the call center. If there is no solution, it is necessary to open a form with the Central Bank.
Consumer support will have special training for PROCON and Public Defender's Office employees across the country, to better act in the cases to be presented.
Furthermore, vetoes were noted prior to the approval of the rule. The section that determined the nullity of clauses in contracts on the supply of products or services, based on foreign laws, with the aim of limiting the power of the CDC was vetoed. In addition, the provision limiting 30% on the monthly remuneration of the value of installments of payroll loans was rejected, as was the refusal to prohibit the offer of payroll loans by mentioning 'interest-free' or 'zero rate'. Idec believes that these are extremely important points that still benefit banks. "With the vetoes, there are points that remain very superficial in consumer protection, especially for the elderly. But there is the possibility of overturning the vetoes or fighting for specific legislation on payroll loans", says Ione Amorim.
According to a monthly survey by CNC, the number of indebted families in Brazil reached almost 70% in June (the highest number since 2010).