High default rate In Brazil, the unemployment rate, which reached 4,7% in May, is a worrying reflection of the country's current economic situation.

This article will analyze the causes that lead to the increase in debt, especially among those who use unsecured credit, whose delinquency rate reaches 7,6%.

Despite the Desenrola Brasil program having renegotiated R$ 15 billion in debt, high interest rates and the high cost of living continue to put pressure on family finances, making it necessary to take a more critical look at the solutions presented and their limitations in resolving structural indebtedness.

Overview of delinquency in May

In May, default rates in Brazil reached 4,7%, reflecting a worrying scenario for Brazilian families.

This high rate not only signals financial difficulties, but also points to macroeconomic implications that could affect the country's growth.

The rising cost of living and high interest rates exacerbate the situation, turning credit into an extension of family income and directly impacting families' ability to pay.

Default on unsecured credit

Free credit is a type of loan where banks and financial institutions set terms, interest rates, and conditions with less adherence to specific rules, which broadens access but also increases risk for those already feeling the pressure of the cost of living.

In Brazil, this dynamic is strongly evident in default rates, because credit becomes a supplement to income, and therefore any tightening of the budget compromises repayment.

Modality	Default Rate	Difference from the General
General rate	4,7 %	Basis for comparison
Free credit	7,6 %	2,9 pp above

This gap is worrying the market, as it reveals greater fragility precisely in the most flexible line of credit, used for consumption and working capital.

Furthermore, high interest rates and pressured income reduce the ability to pay, increasing the risk of further defaults and renegotiation.

Factors that drive default

High cost of living and high interest rates squeeze the budget because they make basic consumption more expensive, increase the value of installments, and reduce the monthly surplus for unforeseen events, which makes credit a supplement to income.

• Inflation of essential itemsFood, energy, transportation, and rent all rise simultaneously, and families begin to prioritize fixed expenses, delaying less urgent bills.
• High interest rates on creditWith credit cards, revolving credit, and personal loans, debt is growing rapidly, as shown by the rise in late payments to 7,6% among those who use unsecured credit.
• Insufficient incomeEven with employment and income increasing, earnings are not keeping pace with the cost of living, and the budget is struggling to pay installments and recurring expenses.
• Renegotiation without attacking the root cause.Programs like Desenrola provide short-term relief, but they don't reduce the structural pressure of debt, so defaults tend to reappear.

Pressure from essential expenses and credit use

Essential expenses have squeezed the budgets of Brazilian families, and therefore, credit has become a way to function as... income extension day to day.

Groceries, housing, water, electricity, and phone bills already consume the majority of the salary, and many households resort to credit cards, installment plans, or revolving credit to make ends meet each month.

This movement helps in the short term, but creates a difficult cycle to break, because debt grows precisely when income is already committed to unavoidable expenses, as shown by research on family budgets, which indicates that these items account for 57% of expenses.

In practice, this happens when a family uses their credit card limit to buy groceries, pays their electricity bill on credit, and lets the next bill accrue interest.

Thus, what seemed like a relief turns into additional pressure, as the high fees make the payment increasingly burdensome.

Even with the renegotiation of R$ 15 billion by Desenrola Brasil, delinquency reached 4,7% in May, and among those using unsecured credit, delays reached 7,6%, showing that the problem goes beyond renegotiation and is linked to the increased cost of living.

Thus, income and employment growth has not been sufficient to offset the rise in basic expenses, leading many families to rely on credit to maintain minimum consumption.

When debt replaces budget flexibility, every unexpected expense, such as medicine, home repairs, or an extra bill, can push the consumer into further arrears.

Hence, Credit has ceased to be an occasional support and has become essential for daily financial routine.making payment difficulties a part of the daily experience for millions of Brazilians.

Desenrola Brasil Program: results and limitations

The Desenrola Brasil Program was created with the goal of reducing default rates in the country, allowing for the renegotiation of debts and reaching the mark of R$ 15 billion in financial agreements by May.

Despite the significant financial results, the default rate remains worryingly high, especially among users of unsecured credit, which stands at 7,6%.

Critics of the program point out that its actions only offer temporary solutions and do not address the structural causes of indebtedness, such as the rising cost of living and high interest rates.

New version of Desenrola Brasil and reactions

The new version of Desenrola Brasil extends deadlines, increases discounts, and facilitates the renegotiation process for families, students, and small entrepreneurs, with discounts that can reach up to 90% and the possibility of using FGTS (Brazilian employee severance fund) resources in some cases, as indicated by... New Developments of the Brazilian Government Furthermore, the measure attempts to reduce default rates and unlock credit, which is seen as immediate relief for those pressured by the cost of living and high interest rates. However, experts say the initiative addresses the symptom, not the structural cause of indebtedness.

1. Main criticismRenegotiation improves access to payment, but does not address the erosion of income caused by more expensive essential expenses.
2. Secondary criticism: the program may stimulate renewed dependence on credit, since wages and jobs are not keeping pace with rising costs.
3. Another criticism: the solution offers temporary relief, but does not permanently reduce the risk of recurring default.

In short, default in Brazil is a complex problem that requires solutions that go beyond debt renegotiation.

Although programs like Desenrola Brasil bring relief, it is essential to address the structural causes that contribute to long-term debt.