How to organise overdue debts

In a nutshell

Overdue debt is scary, but it shrinks once you see it all on paper. The first step is to list each debt with its amount, interest and creditor (who you owe). Then pay essential bills and the highest-interest debts first. And only accept a deal if the payment fits your month.

Example

Ana has four overdue bills:

• electricity: R$ 250 (Brazilian reais);
• water: R$ 150;
• credit card statement: R$ 3,000;
• store credit plan: R$ 1,200.

Adding it all up: R$ 250 + R$ 150 + R$ 3,000 + R$ 1,200 = R$ 4,600.

After rent, food and transport, she has R$ 500 a month left for debts.

Ana starts with the essentials. Power and water can be cut off, so she pays both first: R$ 250 + R$ 150 = R$ 400. That still leaves R$ 500 − R$ 400 = R$ 100 that month.

The next month, she negotiates the rest. The card has the highest interest, so it comes first. She agrees to R$ 300 a month on the card and R$ 150 a month on the store plan. Together: R$ 300 + R$ 150 = R$ 450. Since R$ 450 is less than R$ 500, the deals fit, with R$ 50 to spare.

Who to pay first

Ask two questions to sort the list:

1. Does this bill keep the home running? Water, power, gas and rent come first. Without them, family life stops.
2. Which one has the highest interest? Among the rest, credit cards and overdrafts usually grow fastest. They come next.

A rule that helps: in Brazil, since January 2024, interest and charges on revolving credit card debt and on statement installment plans, added together, cannot exceed the original debt. Late fees and late interest count toward this cap; taxes, such as IOF (a Brazilian tax on credit), do not.

Step by step

1. Check Registrato, a free Central Bank of Brazil service that shows loans and financing with banks and other lenders under your CPF (Brazil's taxpayer ID). Go to Registrato and sign in with your gov.br account (the Brazilian government's login).
2. Add the household bills and store credit plans that do not show up there. For each one, write down the amount, interest, creditor and how long it has been overdue.
3. In Meu Gasto, add each debt under Bills to pay, with amount and due date. You will see everything on the calendar and get reminders.
4. Work out how much is left each month after essential expenses. That is the ceiling for all payments combined.
5. Negotiate directly with the creditor or through consumidor.gov.br, a free public website in Brazil, if the company takes part in it. Ask for the deal's total amount and its CET (total effective cost) in writing.
6. Only accept payments that fit under the ceiling. If they do not, offer a smaller amount or a longer term.
7. Once you close a deal, enter the installments in the app and mark each one as paid when you pay it.

Watch out for scams

Be wary of anyone who promises to "clean your name" for an upfront fee. Nobody can erase a legitimate debt behind the creditor's back. Negotiate only through the creditor's official channels or consumidor.gov.br. And remember: banks never ask for your password, security code or a "test Pix" by phone or message.

Common mistakes

• Agreeing to a payment that does not fit. The deal breaks and the debt comes back bigger. Fix: add up all payments and compare with what is left each month.
• Paying whoever shouts loudest. The most insistent collector is not always the most urgent. Fix: follow the order: essentials, then highest interest.
• Taking an expensive loan to pay another debt. You just swap one debt for another. Fix: only swap if the new CET is lower than the old one.
• Paying a "fee to clean your name". It is a common scam. Fix: negotiate only with the creditor or through consumidor.gov.br.
• Forgetting this month's bills while paying old ones. That creates a new debt. Fix: keep current bills up to date first.