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The uncertainties and challenges posed by the novel coronavirus pandemic disrupted personal finances. Globally, consumers and companies are impacted by the need for social isolation that still persists to a greater or lesser degree, depending on the progress of Covid-19 infections. Still with no forecast of a return to normality, most Brazilians already admit to having had to review their household budget, while more than half of the population believes they will have difficulty paying all their bills during the crisis.

In this context, the ability to negotiate and manage resources becomes a fundamental tool for getting through the period in a less troubled way. To this end, credit regulators have been working to improve financial literacy and consumer programs by publishing recommended action plans and making additional resources available to borrowers.

It's also worth evaluating the subsidized loans made available by the government in order to save money and/or exchange an expensive debt for a cheaper one.

Among the proposals that stand out is advising those facing payment difficulties due to the crisis to approach credit providers to negotiate postponements and restructuring of agreements. Renegotiation, it should be noted, is one of the pillars of maintaining credit at this time, according to the main authorities in the sector. In line with these practices, Brazilian credit bureaus have extended the denial process, which usually takes 10 days from communication to the debtor, to 45 days. In force since April 17, the initiative offers more time for understanding between the parties.

Postponing the due dates of obligations and flexibility between creditors and debtors are also actions indicated during the pandemic. In the opinion of the credit authorities, establishing new conditions for paying debts avoids default and meets the needs of both parties.

The action plans also include measures such as disclosing how credit bureaus will report and process late payments, postponements and restructuring agreements in order to minimize possible impacts on the credit rating.

More frequent review of credit reports, support for the implementation of policy recommendations through technical assistance programs and capacity building for credit report service providers, as well as the convening of a global, national and regional forum to address emerging challenges and promote the formulation and updating of policies related to the issue, are also initiatives cited as relevant for the moment.

In a scenario in which it is still impossible to make any predictions about the end of the crisis, it can be said, however, that reviewing the budget, changing priorities and, above all, renegotiating debts and re-evaluating loans and financing are measures that can make a difference. In this way, financial education will help companies and families get through this period in a less troubled way.

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