The news that a retiree managed to renegotiate debts after almost losing everything he had achieved in 50 years of work may have awakened a sliver of hope in many Brazilians. In all, there are 65 million people in default in the country, according to the Map of Default and Debt Renegotiation in Brazil, prepared by Serasa in February.
But how did he do it? What can be done by those in debt to clear their name?
O UOL Economy talked to experts and gathered tips for you to catch up on your budget as soon as possible.
Where to start debt negotiation
For Josilmar Cordenonssi, professor of economics at Mackenzie Presbyterian University, debt negotiation starts with the basic concept of taking charge of your budget. It is necessary to do the following:
Know what you spend on a monthly basisReduce non-essential consumption like restaurantsPrepare for predictable and unexpected spending.
After that, organize the information in spreadsheets and define the monthly amount you can commit to paying the debt.
It is necessary to prepare yourself psychologically for this moment. Waiting on phone lines, dialing extensions and being transferred is something that can drive someone crazy. That’s why Allan Inácio, professor of finance at PUC-PR (Pontifical Catholic University of Paraná), advises emotional shielding.
The person needs to be calm and patient to talk to the creditor and establish some kind of debt and interest negotiation. Without it, she will have more obstacles in fulfilling her goal.
Haggle, but know the limits
After the previous steps, start trading.
Start by looking to negotiate the amount of debt directly with the creditor who granted the credit, as companies often transfer debts to recovery companies. Not that this is a bad thing, but in general the chance of getting bigger discounts is lower.
One of the pillars of negotiation is to reach an acceptable value for both parties.
During the negotiation, question the financing to lower the interest that is already embedded in the debt. When someone fails to pay a debt, naturally companies will charge interest, so it is important to negotiate as much as possible.
But bargaining has limits.
There’s nothing wrong with haggling. However, insisting too much on getting a concession can be ineffective. There are times when it is better to ask for time than to insist.
Splitting is not always the way
Is it better to pay in installments or pay the debt in cash? In any option, the rule is clear: run from interest.
If the built-in interest rate is higher than your debt, it’s better to pay in cash, even if it takes a while to raise money says If interest is lower, it’s better to pay on time.
Allan Inácio says to expose your finances to the creditor. “Look for payment alternatives, be honest about your situation to find an attractive middle ground for both.”
Waiting for the debt to ‘expire’?
Is it worth letting the debt lapse, that is, not paying anything for five years? According to experts, the feat actually makes the person’s name come out of bodies like SPC and Serasa. However, there is no miracle.
It is not viable. The person will stay years with a dirty name and restrictions. Furthermore, the debt only lapses for the credit system, not the creditor. Depending on the lender, this information could even spread to other companies and end up restricting the person’s credit in many places in the future.
Josilmar Cordenonssi says that if the debt is with a financial institution, the record is permanently at the Central Bank and the debtor will hardly be able to obtain financing (for motorcycle, car, apartment) in any other bank.
And after the debt negotiated?
Once you have the debt negotiated, it is important to honor the maturities. That’s because delays can end the agreements signed, causing the person to have to restart the negotiation process. The lending company may not be so “friendly” again.
“Don’t make installments that you can’t pay”, guides Allan Inácio.
And how do the fairs work to clear the name?
In the case of the retiree mentioned at the beginning of this text, he managed to clear his name at a trading fair. Serasa holds these events in which it helps defaulters to renegotiate their debts and pay off debts. However, you need to check if the company you owe debt to is a partner in the initiative. Serasa clarifies that it is not possible to negotiate protests, bad checks and bankruptcies, but it is possible to settle negative debts or overdue accounts.