The Brazilian economy has been growing in recent years primarily supported by consumer spending that has placed a strong reliance on personal loans. As a result, debt repayment is now a major issue. Every year, lenders send approximately 120 million debt notification letters to more than 42 million consumers. Even so, research shows that 58% of Brazil’s consumers claim not to know about their unpaid debts. This means many receive an adverse credit rating, stopping them accessing financial services in the future.
Serasa Experian has committed to reversing this trend by supporting Brazilian consumers to repay their debts. Since 2012, we have hosted 12 debt fairs across the country. These fairs, called Limpe Nome (‘Clean my name’), have brought 230,000 indebted consumers together with their lenders, enabling them to understand their debts and agree realistic repayment schedules.
While debt fairs are undoubtedly successful, they have limited reach in a country the size of Brazil. So this year we have gone a step further, investing in a new service for consumers, supported with additional funding from Experian’s social innovation programme. In July 2013, we launched Recovery Portal, an online ‘one-stop shop’ which is free to consumers, enabling them to easily access their debt records, talk to their lenders and agree achievable repayments.
The portal will put millions of consumers back in control, allowing them to deal directly with their lenders in a private and secure environment. Agreeing favourable repayment rates will lead to lenders recovering more of their money in the long term and gives them a new, low-cost channel for reaching consumers. The portal will also improve lenders’ relationships with consumers, by preventing people having to deal with collection agencies.
Since its launch, more than two million people have enrolled on the Recovery Portal, registering an average of two debts each. Pilot studies have shown that approximately 70% of users successfully negotiate debt settlements. Research has also shown that many of the portal’s users are low earners, with incomes around the minimum wage. By embarking on an awareness campaign across Brazil, our goal is for five million consumers to be registered on the portal by March 2015.