Over-indebtedness Law – Understand the impacts for companies

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In force since last year, the Over-indebtedness Law offers a solution for consumers who are no longer able to pay their financial commitments.

Now, they can request a block renegotiation of their debts at the Court of Justice, Procon or Public Defender's Office in their state, where a conciliation will be carried out with all creditors.

But how does this impact the relationship between companies and defaulting customers? We explain it below!



Understanding the Law of Over-indebtedness


Sanctioned in July 2021, the Over-indebtedness Law (14,181/2021) came to help skype database reorganize their financial lives, bringing new possibilities for paying off personal debts.

According to the law, a person is in a situation of over-indebtedness when their debts are greater than the expenses necessary to guarantee fundamental rights, such as housing and food, for example.

The consumer, an individual , must assume, in good faith, that he or she is no longer able to pay all his or her bills. The law does not apply to corporate customers !



Debt renegotiations can now be collective


The main change brought about by the Over-indebtedness Law was the creation of an alternative for renegotiating debts “en bloc”.

Now, consumers who have financial debts with several companies can request, in a Court of Justice, Procon or Public Defender's Office, a collective agreement, which reconciles all creditors at once, creating a payment plan. This plan must fit the consumer's budget and, at the same time, settle the debts with all companies.

All creditors are called to a hearing. During the hearing, the current situation of the defaulting customer is presented and a payment proposal is given within the budgetary limits.

Currently, in Paraná, this service is offered by the state's Court of Justice.



Which debts can be renegotiated “en bloc”?


One of the main benefits of renegotiating debts “in bulk” is that the defaulter can include all of his/her outstanding debts in a single payment plan. This way, he/she does not have to go through the impasse of paying one of them and not being able to settle the others.

But be careful: the Over-indebtedness Law states that only debts related to consumption, household bills and debts with financial institutions can be included in this type of negotiation.

The debts that can be collectively negotiated are:



Consumer debts – bills and invoices;
Water, electricity, telephone and gas bills;
Loans from banks and financial institutions – including overdrafts and credit cards;
Credit;
Installments.


The legislation also stipulates that the following pending issues are not included in the possibility of block renegotiation :



Taxes and other duties;
Alimony;
Housing credit – such as financing for your own home;
Rural credit;
Luxury products and services.






Read also: “ Debt Renegotiation – Guidelines to ensure the effectiveness of agreements ”


Can my company reject the block renegotiation request?


According to the text of the Over-Indebtedness Law, any agreement made in bulk will have the same value as a court ruling. In this case, both the client and the creditor companies will receive, documented, the payment conditions (total amount of the debt, number and value of installments), discounts on fines and interest and the total duration of the renegotiation .

The ruling should also determine the suspension or termination of legal collection actions prior to the block agreement.

It is important to note that if your company is called to participate in a collective renegotiation hearing, it is not obliged to accept the proposed agreement. However, it is important to be aware of the sanctions!