Document Type

Article

Disciplines

International Law

Abstract

This article compares debt collection and consumer debt relief in the United States and Brazil. It is the first article to do that since the 2021 enactment of Brazil's Consumer OverIndebtedness Law. This Article compares that Over-Indebtedness Law with its closest U.S. analog, Chapter 13 of the Bankruptcy Code, and does so in the broader context of each nation's debtor-creditor law. The United States has offered bankruptcy relief to consumers since 1898 and has since 1978 provided consumer debtors two relatively attractive Bankruptcy Code choices for discharging debt: Chapter 7 liquidation and a payment plan under Chapter 13. In contrast, Brazil has not developed a similarly effective system of consumer debt relief Like other civil law (as distinct from common law) countries, Brazil has long offered bankruptcy to businesses but not to consumers. Brazil's longstanding Civil Insolvency law for consumers does notprovide an immediate fresh start and quick discharge like Chapter 7 but instead delays the discharge for at least ive years during which any property acquired by the debtor will be taken to pay creditors. These differences explain why Brazilian consumers rarely choose to enter civil insolvency while hundreds of thousands of U.S. consumers choose each year to ile for Chapter 7. The differences between the U.S. and Brazil may be somewhat less stark with respect to paymentplans because Brazil's enactment of the Consumer Over-Indebtedness Law gives it something roughly similar to Chapter 13. However, this Article shows that the Over-Indebtedness Law is harder on debtors than Chapter 13 with respect to their eligibility for the process, its treatment of secured and nonconsumer unsecured debts, and the role ofcreditor consent in confirming a repaymentplan. Moreover, a higher proportion of debtors using the Over-Indebtedness law may do so without a representation from a lawyer, compared to the low proportion of unrepresented debtors in Chapter 13. In sum, even with the Over-Indebtedness Law, Brazilian consumers continue to have far less ability than U.S. consumers to discharge debts through a courtconfirmed repayment plan.

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