Brazil's Desenrola debt relief program faces key uncertainties ahead of January launch

The Brazilian government promised to launch Desenrola in January—a debt renegotiation program aimed at people earning no more than three minimum wages, roughly R$3,960 a month. The idea is straightforward enough: help the financially trapped restructure what they owe. But as the launch date approached, the program remained a sketch rather than a blueprint, full of blank spaces where crucial details should have been.

The program, as outlined in President Luiz Inácio Lula da Silva's campaign platform, would target two categories of debt. For non-bank debts—credit card balances, medical bills, utility arrears—the government would create a guarantor fund, essentially backing creditors who agreed to renegotiate and offer discounts. For unsecured bank debts, the mechanism was different: banks would receive compensation through adjustments to their compulsory reserve requirements, a tool controlled by the independent Central Bank. But here lay the first problem: no one had yet worked out the details with the Central Bank, which guards its independence carefully.

The gaps in the proposal were substantial. How much of a non-bank debt would the guarantor fund actually cover? How much would remain on the creditor's books? For bank debts, would the government set caps on interest rates and penalties, or would banks retain pricing power? And a more fundamental question: would the program even include consigned loans tied to the Auxílio Brasil welfare program—a form of debt that had become endemic among the poorest Brazilians? No one could say. Adding to the confusion, most major banks already ran their own renegotiation programs, sometimes holding debt-relief "marathons" to clear arrears. The government's program risked duplicating what already existed or, worse, creating confusion about which path borrowers should take.

The Desenrola was not the only proposal circulating. In December, federal deputy Elmar Nascimento from the União party had introduced ReFamília, a competing bill that would allow families earning up to R$5,000 monthly to renegotiate debts up to R$20,000 contracted before the end of 2023. This program would work through official banks—Banco do Brasil, Caixa Econômica Federal, Banco da Amazônia, and Banco do Nordeste—with a government-backed guarantor fund and interest rates set by the Monetary Policy Council based on the Selic rate plus operational costs. Repayment periods would stretch from 36 to 60 months. Notably, ReFamília excluded consigned loans, home mortgages, and agricultural credit.

The landscape of debt relief proposals extended further back. During the 2022 presidential campaign, candidate Ciro Gomes had proposed something more radical: a law against "greed" that would consider credit card, overdraft, and personal loan debts paid in full once the borrower had paid double the original amount. That idea had not advanced, but it reflected a broader frustration with the cost of borrowing in Brazil.

Already on the books was the Superindebtedness Law, passed in 2021, which allowed consumers deemed unable to pay their debts without sacrificing basic needs to negotiate globally with all creditors at once, with repayment periods up to five years. The law's weakness was its vagueness: it never defined what "basic needs" actually meant. This ambiguity had created a legal vacuum. Banks and creditors operated in uncertainty, unsure how courts would interpret the rule. The result was a creeping threat of litigation—debtors suing for relief, creditors fighting back, judges left to invent standards case by case.

As January approached, the government faced a choice between speed and clarity. Desenrola could launch as promised, but with so many operational questions unresolved, it risked becoming a program in name only—announced but not truly functional, creating false hope among millions of Brazilians carrying debt they could not manage. The alternative was delay, which meant postponing relief for people who needed it now. Either way, the real work—negotiating with the Central Bank, coordinating with commercial banks, defining the guarantor fund's scope, setting interest rate limits—still lay ahead.