Banking Law
Banking Law: over-indebtedness and debt restructuring
When credit installments begin to consume the income meant for basic expenses, the problem is no longer a single debt. That situation — over-indebtedness — is what the work in this area addresses.
When debts start to encroach on the basic subsistence threshold.
Charges, collateral, and collection methods are not always clear when credit is taken out. The effect usually appears later, when installments start to consume the income meant for basic expenses — a situation that may constitute over-indebtedness, addressed by Law No. 14.181/2021, which amended Brazil’s Consumer Protection Code and provides mechanisms for debt restructuring while preserving the basic subsistence threshold (mínimo existencial).
Contracts, bank statements, and receipts reveal the full set of debts, the available income, and essential expenses. When the share of income committed constitutes over-indebtedness, the debt restructuring request provided for in Law No. 14.181/2021 is examined, alongside direct negotiation with creditor institutions and litigation in court.
Over-indebtedness and debt restructuring.
Over-indebtedness and debt restructuring
The review brings together all consumer debts, the available income, and essential expenses to measure how much of the budget is committed and to assess whether a debt restructuring request under Law No. 14.181/2021 is available.
Frequently asked questions about Banking Law.
Law No. 14.181/2021 describes an individual consumer, acting in good faith, who is clearly unable to pay all of their consumer debts, both due and falling due, without compromising the basic subsistence threshold (mínimo existencial). Whether a situation qualifies does not depend solely on the amount owed: it involves a review of each person’s debts, income, and essential expenses, and is determined case by case.
Contracts and amendments, bank statements, bills, proof of payment, proof of income and essential expenses, and collection notices received. When the client does not have the signed agreement, a copy of the contract and the debt progression spreadsheet can be requested from the financial institution — and it is prudent to gather them before drawing any conclusions.
Have your debts started to strain your income?
The full set of debts, the monthly income, and essential expenses give a measure of what can be disputed.