CNDL data indicate the number of overdue debts in Brazil grew by 18.42% in April compared to the same month of 2022
The merchandise that guarantees Guilherme Nogueira’s livelihood is available every day, from Monday to Friday, spread across the floor of a sidewalk on Rua Uruguaiana, in the center of the city of Rio de Janeiro. The 28-year-old young man had a formal job, with a formal contract until 2020.
With the arrival of the covid-19 pandemic, he was fired and, since then, he has had to do what he can to guarantee his livelihood and that of his son. Currently, he sells backpacks that are displayed on a tarp for people who walk along the busy street in Rio. “Some days it sells, some days it doesn’t. Some days they sell 5, 8 backpacks. In others, it sells two. It’s hard, the guards [municipais] want to catch [apreender] the backpacks”, says William.
The loss of his job also involved him in a situation that affects 66 million Brazilians today, according to data from the CNDL (National Confederation of Store Managers): Young people are unable to pay their bills.
Without a stable source of income, Guilherme is unable to pay off his credit card debts. “I couldn’t afford to pay the bank. I made a credit card and didn’t have money at the time to pay. I have card debts from 2 banks“, account. “I have no plans to be able to pay that off. It’s hard.”
Default, that is, bills or debts in arrears, affects, according to the CNDL, 4 out of 10 Brazilian adults. The number of overdue debts in Brazil, in April this year, grew 18.42% compared to the same period last year. Debt with banks is, according to the confederation, the main reason for default: 63.8% of the total.
And, like Guilherme, defaulting Brazilians owe two companies on average. Almost half of Brazilians in the age group to which street vendors belong (25 to 29 years old) are in default.
But it’s not just young people who face the problem, nor are banks the only source of hard-to-pay debts. José Raimundo, 67, is also self-employed. He has worked for years as a shoeshine boy, a few meters from where Guilherme sells his backpacks.
And just like his fellow seller, he was greatly impacted by the pandemic. Still unable to count on a pension – he applied for the Elderly Assistance Benefit, but has not yet received the Social Security endorsement to receive the money – he lost a large part of the clientele that used his services before covid-19.
“Just because of the pandemic, I stayed at home for almost 2 years. Then I got sick, unable to do anything. I was 3 years and little without working. And then it was delaying everything. My wife alone paying for everything: water, electricity, telephone. What I delayed the most was the water bill. When the benefit comes out [da Previdência], I’ll talk to the dealership and pay in installments. I don’t want to owe anyone anything. I don’t have that nature of bad payer”, tells the shoeshine boy who recently resumed his trade.
In every 4 seniors aged 65 to 84, 3 are in arrears in the country. Water and electricity account for 11.1% of defaults, a percentage similar to that of commerce, which represents 11.6% of unpaid debts.
Default also affects those who have a formal job. Alessandro Gonçalves is 30 years old and works as a doorman in a commercial building in downtown Rio.
Every month, he has to juggle making sure his money meets his daily needs. And that involves delaying the payment of some bills.
“It’s that routine difficulty. You have a bill to pay and you can’t. It arrives at the end of the month, takes the money to pay the bill and fails. Our salary, we make an account and, when it arrives at the end of the month, we cannot pay. And then we have to delay the bills“, it says.
INCOME
According to Merula Borges, a finance specialist at the CNDL, loss of income is one of the reasons why people default.
“In the survey, when people were asked why they went into default, they said they had lost income or themselves, or someone in their family”, says Merula. “This is natural, since, when income is lower, the space that basic items occupy in the family budget is greater and people are less likely to deal with any unforeseen events that may occur.”
According to the expert, those with lower incomes also need more financial discipline to avoid default.
“There is, yes, a possibility for people to remain in debt, despite the lower income, but it is much more difficult. So, the focus of those with a lower income needs to be on improving their qualifications, looking for free courses, possibilities to improve their own income to get into a slightly more comfortable situation.”, declares
Merula says that public policies are needed to help Brazilians get out of this default situation. The federal government is preparing a program, called Desenrola, which intends to renegotiate up to R$ 50 billion in debts owed by 37 million individuals.
The policy is being prepared by the Ministry of Finance, which, in response to the Brazil Agencystated that “does not manifest itself on measures in preparation”.
With information from Brazil Agency.
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