Nearly 60 million Brazilian consumers in default

The number of Brazilians faced with overdue debts has reached a record 57 million, and is now higher than it was in August last year (55 million people), reports Serasa Experian, which holds the country’s largest consumers database, covering both natural and legal persons.

The survey also shows that 60% of insolvents face outstanding bills totaling over 100% of their monthly income. In addition, 53% are burdened with up to two unsettled debts.

According to experts from Serasa Experian, the heightened number of insolvents derives from increasing indebtedness among families and injudicious shopping habits. Consumers, he maintains, fail to take into consideration regular monthly expenses and previously incurred debts.

Payments divided into installments with high interest rates, as is typical with the purchase of cars and property, along with costly fees arising from overdrawn accounts and credit card transactions are also harmful to the budget and contribute to insolvency, the analysts from the institution argue.

“The current situation is worrying, as it reveals that 40% of the 144 million Brazilians aging 18 or above are in default. But it’s still not enough to be considered alarming, since the debts don’t amount to a lot. Nonetheless, it calls for a closer analysis and closer attention,” said Vander Nagata, Serasa Experian’s Superintendent for Information on Consumers.

In his view, the urge to shop indiscriminately should be eliminated through financial education and transformed into awareness. Buyers should also stop shopping on an impulse or ostentatiously. “This is the challenge faced by Brazilians, who spend more money than they make, and don’t save any, in spite of being aware of the importance of this behavior” he noted.

He went on to highlight that companies should make wide use of risk reduction tools when granting credit to customers. “Creditors should be given more information for a more accurate assessment of payment capability. Credit is a powerful tool for economic development, if the debt is cleared. If there’s default, it’s harmful,” Negata added.

Translated by Fabrício Ferreira