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At least three out of every ten Brazilians are in debt. The Brazilian regions have default minimum of 30%. According to the World Bank, in a study carried out in 2015, only San Marino, Cyprus and Greece, in that order, had a higher percentage of debt than Brazil. Greece that year was immersed in a deep economic crisis, which is still plaguing the country.

The information on Brazil is part of the latest study carried out by ANBC (National Association of Credit Bureaus), based on data from IBGE (Brazilian Institute of Geography and Statistics) and the credit bureau sector. The aim was to gauge the impact of default.

The region South has 34% of its population in debt. Of the 27 million inhabitants, 9 million are in default. In South East, The scenario is practically the same in terms of the proportion of people in debt. Of the 80 million inhabitants, 26.7 million have unpaid bills, equivalent to 33% of the population. Next, North e North East appear with the same percentage of debt: 31%. There are 4.9 million people in the North and 16.3 million in the Northeast. Lastly, but also in a bad situation, comes the Midwest, which has 4.7 million defaulters out of a population of 16 million. Doing the calculations, we arrive at a percentage of 30%.

In the first part of the research, we showed that four out of ten Brazilians in debt are young people. In absolute numbers, 25 million people. This means that generations Z and Y (also known as millennials) are already entering the consumer market with a high level of debt. In this second part, the focus of the work was to show how default is distributed among the different age groups in the five Brazilian regions.

As a common characteristic of the regions, the average debt ticket starts to grow from the age group between 31 and 35 and continues on this upward trajectory until the age group between 51 and 60. There's an explanation for this: people start building their families in their 30s, which increases their monthly expenses. According to the most recent civil registration data released by the IBGE, of the 2.86 million births registered in Brazil in 2017, the mother at the time of delivery was aged 30 or over in 35.1% of the cases. According to the IBGE, when these figures are cross-referenced with the gradual decrease in the proportion of women who had children in their 20s or younger, there is a trend towards later motherhood.

The ANBC study also shows that there are 8.8 million elderly people in debt throughout Brazil, with an average ticket of R$ 4.6 thousand. That's so many people that the elderly are second only to the 41-50 age group. And just as bad: the average ticket is second only to the three age groups between 36 and 60, which are 36 to 40, 41 to 50 and 51 to 60. One of the reasons for this situation is that the elderly person's income from retirement often represents the livelihood of an entire family, including children and grandchildren. In this scenario of many dependents, it is not difficult for the elderly to commit part of their pension to taking out a payroll loan. If they are unable to meet this obligation, they take out more expensive loans, such as overdrafts, which results in unpayable debt and a budget out of control.

With the entry into force of the new Positive Register As of July 9, the expectation is that there will be an improvement in the default scenario indicated by the ANBC study. The number of debtors is expected to fall by up to 45%. The new rules will allow each Brazilian to be assessed more thoroughly, cutting down on bureaucracy and making it easier to obtain credit. Based on their credit rating, consumers will be able to negotiate better interest rates and payment terms.

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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor