Over 73M Brazilians struggle with debt

The latest survey by Serasa's research service reveals that at least 73.1 million people were in debt in Brazil as of October. This marks the second-highest figure of the year, surpassed only by April. According to Serasa, these data indicate a rising trend in defaults.

The survey shows that Brazilians aged 41 to 60 account for the largest share of individuals with restricted credit, at 35.1 percent. They are followed by those aged 26 to 40 (34.0%), seniors over 60 (19.2%), and young adults aged 18 to 25 (11.8%).

According to Liliam Carrete, a professor of administration and finance at the University of São Paulo, starting 2025 debt-free will be challenging, especially as interest rates are currently at their highest levels in recent years, making this the worst time to incur debt.

“So, taking on debt means committing to high interest payments, which will cut into my future income. The ideal approach is to reduce consumption as much as possible and pay off as many debts as I can to enter 2025 with minimal debt,” she explained.

Carrete noted that while reducing consumption is essential, it is a significant challenge due to the numerous year-end incentives encouraging spending, coupled with the personal desire to reward oneself for a year of hard work.

Renegotiation

The second necessary step is to renegotiate debts as early as the start of 2025. When debt reaches a level that exceeds 30 percent of one´s income, it’s a clear warning sign. “If I reach that point, it’s important to begin negotiations, prioritizing the most expensive debts, typically credit card balances,” the professor advised.

Carrete highlighted that debts often reach a point where individuals have no options left. In such cases, it becomes crucial to identify which debts are the most important and essential to pay off.