Brazil defaulters hit record 84.2 million, Serasa says

Brazil had 84.2 million people with overdue debts in September, the highest number Serasa has recorded, the credit bureau said in its Debt and Renegotiation Map published on 2 November. The count was about 300,000 higher than August's 83.9 million and is roughly the population of Germany.

Serasa, a private bureau that tracks who has fallen behind on payments, said the figure was about 6% above September last year and 34.17% above 2020. It is the first month the count has passed 84 million.

Total overdue debt reached 597.4 billion reais (about $110 billion), 0.90% more than in August. The average debtor owed 7,093.83 reais (about $1,305), or about 4.4 times the minimum wage.

Brazilians in this position are called negativados: their names sit on a credit blacklist, which makes it harder to take a loan, hold a credit card or buy goods in instalments.

Banks and credit cards accounted for 27.16% of the overdue debt. Finance companies, which make personal and consumer loans outside the big banks, came second at 20.66%, overtaking water, electricity and gas bills (20.32%) for the first time. Utilities had traditionally ranked second among creditors.

People aged 41 to 60 made up 35.7% of those listed, those aged 26 to 40 accounted for 33.2%, the over-60s for 20.1% and those aged 18 to 25 for 11%. Women were 50.5% of the total and men 49.5%.

Serasa's figures do not say why the count rose. Brazil's central bank has kept borrowing costs high to fight inflation. Its Selic benchmark rate stands at 13.75%, after cuts from 15.00% earlier this year, and the IPCA consumer price index rose 4.58% in the 12 months to September, up from 4.22% in August, according to the statistics agency IBGE.

The central bank's rate committee, Copom, announces its next Selic decision on Wednesday, 4 November.

Serasa opened its debt settlement fair, Feirão Limpa Nome, on 3 November. It runs to 6 December. In its July release the bureau counted more than 14 million settlement agreements between May and July, 41% more than a year earlier, covering more than 7 million consumers.

A listing does not establish that a debt will go unpaid, and a record count does not by itself show the economy is in recession. Lenders including Itaú Unibanco and Nu Holdings follow consumer delinquency because it drives loan losses. Serasa's October count will show whether September was a peak.