Débora Chaves Martines Fernandes, Bruna de Godoy Marques das Neves, and Barbara de Souza Braz

It is no surprise that in Brazil, where there are about 66.43 million delinquent debtors,[1] normative acts aimed at fighting the population's indebtedness are gaining popularity. An example of this is the discussions that surrounded Law 14,181/21, the so-called Over-indebtedness Law, which was received by the interpreters of the law and by consumers with optimism, but also with relevant doubts about its reach and practical application.

Law 14,181/21 made additions to the Consumer Protection Code (CDC) to introduce a consumer credit microsystem,[2] with the objective of preventing and treating the phenomenon of over-indebtedness. One of the pillars of the law is the safeguarding of the so-called "existential minimum”, that is, the amount that must be kept safe from creditors to ensure the debtor's livelihood. The Over-indebtedness Law, however, did not specify the amount of this existential minimum, leaving the task to complementary regulations.

Effectively, the existential minimum was regulated via Presidential Decree 11,150/22, promulgated on July 26, 2022, in the following terms:

"Article 3. In the scope of prevention, treatment, and administrative or judicial conciliation of situations of over-indebtedness, the existential minimum is considered to be the consumer's monthly income equivalent to twenty-five percent of the minimum wage in effect on the date of publication of this Decree."

This definition assigned to the existential minimum the nominal value of R$303, equivalent to 25% of the minimum wage at the time. This amount is fixed, since the decree itself established that minimum wage adjustments will not have an impact on the amount of the existential minimum (article 3, paragraph 2). It will be incumbent on the National Monetary Council to make any changes to the sum (article 3, paragraph 3).

On the one hand, the definition of a fixed value for the existential minimum provides predictability for both consumers and suppliers and defines objective parameters for application of the Over-indebtedness Law.

On the other hand, the amount of R$303 was the target of severe criticism on the other hand, because it is considered negligible and incapable of meeting the basic needs of Brazilian citizens, besides creating possible distortions between debtors who receive the minimum wage and those who receive much higher amounts.

Other criticisms were directed at debts that are not protected by the reserve of the existential minimum, such as real estate financing and debts related to entrepreneurial activity.[3] In the view of some scholars, this would harm lower income consumers.

The effervescence of the topic, in part, is linked to the heat of Brazil's political environment, and there are signs that the alternation of power that occurred in the 2022 elections may interfere with the limits of the consumer credit microsystem.

New political landscape and impacts on the amount of the existential minimum

Since the promulgation of Presidential Decree 11,150/22, members of the Legislative Branch had already been moving to change the provision that established the amount of the existential minimum. The main pivot of this movement is Legislative Decree Bill 306/22 (PDL 306/22), currently in progress in the House of Representatives.

This bill aims to suspend the effects of Presidential Decree 11,150/22, under the justification that the advances of the Over-indebtedness Law were compromised by the presidential normative act.

It is argued that, despite filling the gap left by the legislator in the Over-indebtedness Law, the decree impacts mainly on the poorest population in Brazil, since the amount guaranteed by law as a reserve for the consumer is very small and does not help in reducing family indebtedness, which had an increase of about 6.54% compared to 2021.

In addition, the author of the legislative proposal, representative Gustavo Fruet, considers that in a context of rising interest rates, rising inflation, high unemployment rates, and increasing extreme poverty, default rates have been steadily rising in Brazil, reaching about 4 out of every 10 Brazilians in 2022.

In the current economic circumstances, setting the value of R$303 for the existential minimum could compromise survival itself, by reducing family income, increasing indebtedness, and transferring resources from citizens to creditors. For these reasons, the proposal requests that the House of Representatives vote to annul the presidential act, seen as "clearly damaging to the public interest.”

PDL 306/22 has been in the progress since August 1, 2022. Currently, it awaits the designation of a reporting judge to be review by the Consumer Protection Commission. As it is an ordinary proceeding proposal, if approved by the commission in question, it will still be forwarded to the Constitution and Justice Committee for review of its constitutionality.

The text will then be put on the agenda for a vote on the floor of the House of Representatives. Once this legislative house has concluded its review, the proposal still has to be approved by the Senate before it can enter into effect.

During its course in the Congress, the proposal may be amended by the relevant subject-matter committees. It is therefore not possible to guarantee that the legislative decree intended will be enacted in the terms currently proposed, nor whether it will be enacted at all.

What we have is that, according to the terms of the proposal, the new legislative act would reestablish the status quo prior to the enactment of the decree, to reconstitute the legal gap in the definition of the existential minimum, which is also not the ideal scenario, since it creates legal insecurity regarding the parameters of the application of the law in each of the country's courts.

Besides the questions raised by PDL 306/22 and the possibility of a declaration of unconstitutionality or violation of a fundamental precept by the Federal Supreme Court,[4] the decree can also be revoked, extinguished, or changed by a new normative act of the same authority, that is, by a new presidential decree.

The head of the federal executive branch can establish a new value for the existential minimum by means of a presidential act. The new president can also simply revoke the act of his predecessor, in order to reestablish the previously existing legal loophole, to be closed by a new normative act.

There is news that the current government is studying the possibility of overturning the decree promulgated in 2022, as indicated by the head of the National Consumer Bureau, Wadih Damous.[5] The possible change in the existential minimum, if compatible with the government's objectives, would be part of the debt reduction program that the government intends to launch, called Desenrola Brasil [“Untangle Brazil”].

There are, therefore, at least three distinct and plausible ways to repeal or change Decree 11,150/22, each of them under the responsibility of one of the branches of the Government.

Aside from the discussion regarding the sufficiency of the amount of the existential minimum currently in effect, the indetermination of its continuation and its form of application has a direct impact on the implementation of public policies for the protection of indebted consumers, the main focus of the Over-indebtedness Law, and prevents all players in the consumer market from fully enjoying their rights.

The importance of the topic justifies the engagement of entities representing suppliers and consumers, in addition to the close and critical monitoring of interpreters of the law, such that a balance can be reached that is capable of guaranteeing consumer protection, without neglecting the impact of the policies implemented on the supply of credit, which is indispensable to the smooth running of the country's economy.


[1] Data from the Map of Delinquency and Renegotiation of Debts made available by Serasa.

[2] BERTONCELLO, Káren Rick Danilevicz.  “O processo judicial de repactuação das dívidas: modelo brasileiro de mínimo existencial instrumental” ["The judicial process of debt renegotiatio: a Brazilian model of the instrumental existential minimum”]. Revista de Direito Consumidor, Vol. 144/2022, pp. 17-35.

[3] DUQUE, Marcelo Schenk. “Parecer sobre a inconstitucionalidade do Decreto 11.150, de julho de 2022” ["Opinion about the unconstitutionality of Decree 11,150, of July of 2022”]. Revista de Direito do Consumidor, Vol. 143/2022, pp. 407-416.

[4] Currently up for completion is ADPF 1005 (reporting Justice André Mendonça) and ADPF 1006 (reporting Justice André Mendonça).