Debt and default: understand the difference and how to escape the snowball More than eight in ten Brazilian families remained in debt in June, according to the Consumer Debt and Default Survey (Peic), released this Tuesday (14) by the National Confederation of Commerce in Goods, Services and Tourism (CNC). ? In total, 81.6% of families said they had some type of debt, such as credit cards, financing, personal loans, overdrafts or store vouchers. The percentage repeated that recorded in May and interrupted the sequence of increases observed in previous months. The scenario was also stable among families with outstanding bills. In June, 29.9% of those interviewed said they had overdue debts, the same rate as the previous month. The portion of consumers who declared they were unable to pay off these debts fell slightly, from 12.3% to 12.2%. Despite the stability of the main indicators, the CNC assesses that there has been an improvement in the composition of debt. The entity highlights the increase in the participation of families that consider themselves to be low in debt, the maintenance of income commitment at stable levels and the reduction in the average delay in paying debts. Changes in the debt profile Between May and June, the percentage of families that classified themselves as having little debt rose from 33.3% to 34.2%. In the same period, the share of those who consider themselves very indebted rose more moderately, from 17% to 17.2%. The CNC itself emphasizes, however, that this assessment is subjective in nature and reflects each consumer's perception of their financial situation. In other words, feeling very indebted does not necessarily mean being in a situation of over-indebtedness. Another positive sign was the reduction in the average debt delay time, which fell to 64.8 days. Furthermore, 48.9% of delinquent families said their accounts were overdue for more than 90 days, the lowest percentage recorded this year. The average commitment of income to paying debts remained at 29.3%. The share of families with financing or loans contracted for a period of more than one year remained at 33.3%. For CNC, longer terms help reduce the value of monthly installments and give more breathing room to family budgets. Income influences the weight of debts The differences become more evident when the data is analyzed by income range. Among families that receive up to three minimum wages, 84.7% have some type of debt — the highest percentage among all groups surveyed. In this range, 38.3% have outstanding bills and 17.6% say they will not be able to pay off these debts. Among families with income above ten minimum wages, 71.4% said they were in debt. In this group, default was 15.4% and only 5% declared that they were unable to pay overdue bills. In the comparison between May and June, the greatest increase in debt occurred among families with an income of three to five minimum wages, whose percentage increased from 83.1% to 83.7%. In the opposite direction, among those with an income of five to ten minimum wages, the indicator fell from 79.6% to 78.3%. According to the CNC, a similar movement was observed in defaults: the income range that recorded the greatest increase in debt also showed an increase in overdue accounts, while the group that reduced the use of credit recorded a drop in defaults. Desenrola may have helped, but the scenario still requires caution In the CNC's assessment, the improvement observed in some indicators may be related to the first months of operation of Desenrola 2.0, a federal debt renegotiation program launched in May. The entity also attributes this performance to the increase in average family income and greater control of inflation, factors that help preserve consumers' ability to pay. Even so, the confederation projects that both the percentage of indebted families and the percentage of consumers with overdue bills should grow again in the coming months. Therefore, he assesses that, despite signs of improvement, the scenario still requires caution. Decon carries out debt negotiation and other services in the Conjunto Ceará neighborhood, in Fortaleza. Pexels/reproduction