Debt collection in Brazil: what a creditor can and cannot do

Collecting is lawful. Harassment is not

A debt is a debt. The creditor has the right to collect, to call, to send letters and to negotiate. What Brazilian law forbids is the method.

Article 42 of the Consumer Protection Code (Código de Defesa do Consumidor, Law 8,078/1990) is direct · in collecting debts, the defaulting consumer shall not be exposed to ridicule, nor subjected to any kind of embarrassment or threat. Its sole paragraph adds that whoever pays an amount not owed is entitled to recover double what was paid, except in cases of justifiable mistake.

• Not allowed · collecting at the debtor’s workplace in a way that exposes the situation to others
• Not allowed · telling family members, neighbours or colleagues about the debt
• Not allowed · threatening consequences that do not exist, such as prison for an ordinary civil debt
• Not allowed · using humiliating or degrading language, in writing or by phone
• Allowed · calling, writing and messaging the debtor personally, at reasonable hours
• Allowed · protesting a legitimate, overdue instrument before a notary, and listing the name in a credit register after prior notice

Debts age, and that changes what can be done

Limitation (prescrição) extinguishes the right to claim the debt in court. The periods vary with the nature of the debt and the document recording it, and are found in article 206 of the Civil Code and in the specific statutes of each instrument.

There is a further period that is often confused with it · the Consumer Protection Code limits how long negative information can stay in credit protection registers. A debt can continue to exist even after the name has left the register.

A time-barred debt cannot be claimed in court or justify blacklisting. It survives as a natural obligation · if paid voluntarily, the payment is valid and cannot be reclaimed.

On the creditor’s side: the document defines the route

For a business waiting to be paid, the practical question is which instrument the debt allows it to use.

• An extrajudicial enforceable instrument, listed in article 784 of the Code of Civil Procedure · an accepted trade bill (duplicata), a cheque, a promissory note, a contract signed by two witnesses. It allows direct enforcement
• Written evidence without enforceable status · a confirmed order, an invoice, an exchange of messages. It supports a monitory action, under article 700
• No document at all · what remains is an ordinary collection claim, with full production of evidence
• Notarial protest, governed by Law 9,492/1997 · fast, cheaper than a lawsuit, and frequently enough to bring about a negotiation

The mistake that costs creditors most

Protesting or blacklisting a debt that was already paid, is time-barred or has no basis completely reverses the parties’ positions. The creditor stops being the one who claims and becomes the one who answers, facing a demand to remove the name and, depending on the case, to pay compensation.

Before any public measure, confirming three things avoids most of these cases · that the debt exists, that it has not been paid, and that it is still within the limitation period.