Existential minimum of R$ 600 applies to over-indebted people – 06/19/2023 – Market

President Lula (PT) decided this Monday (19) to raise the existential minimum from R$303 to R$600. This is the amount of monthly income that banks cannot take from over-indebted people.

“I signed today the increase in the value of the existential minimum to R$ 600, a measure that increases the slice of income that cannot be charged on payroll loans or blocked by financial institutions in case of over-indebtedness”, announced the PT on social networks.

The concept of the minimum was introduced into the Consumer Protection Code by legislation on over-indebtedness approved in 2021.

In practice, an indebted individual who requests a conciliatory hearing to make a new proposal for the payment of his debts is guaranteed that at least R$ 303 will not be compromised and can be used for subsistence.

According to the president, “this initiative is part of a series of efforts by the government to guarantee credit and consumption conditions for the Brazilian people, contributing to the heating up of the economy”.

Calculations by the Ministry of Finance when preparing the measure predicted that the measure could reach 14 million Brazilians (5 million more than currently), who will be entitled to apply for a special procedure for renegotiating debts with the Union.

According to preliminary estimates, the balance subject to renegotiation would grow by around BRL 30 billion, from BRL 235 billion to BRL 266 billion. The value of R$ 600 for the existential minimum was defined by the Treasury together with the Ministry of Justice to match it to the Bolsa Família program floor.

The Treasury had announced the measure in April. At the time, the Secretary for Economic Reforms, Marcos Pinto, said that the measure “may be a source of relief for the population at this time”.

He said that the government does not expect adverse effects on granting credit with the new amount and does not see the need to activate public banks. “We don’t think that this measure will generate credit rationing. Today, banks’ credit policies hardly allow granting large volumes to people in this income bracket.”

Last year, then President Jair Bolsonaro (PL) edited a decree to regulate the existential minimum and established that the minimum amount a person needs to pay basic expenses is a quarter of the minimum wage, which is equivalent to R$ 303.

At the time, the MPF (Federal Public Ministry) released a technical note in which it contests the value. The text said that the Overindebtedness Law should serve to preserve consumer rights, but that, in the way it was regulated by Bolsonaro, it did not guarantee sufficient income for basic domestic commitments and expands the possibilities of debt for the most vulnerable population.