Many people believe that a law exists in Brazil prohibiting the negative credit reporting of a consumer due to non-payment—especially after the enactment of the Over-Indebtedness Law. However, this is a myth: there is no rule that prevents the inclusion of a person’s name in credit protection registries due to missed payments.

Negative credit reporting is a legal right of the creditor, provided for in the Consumer Protection Code, and serves to alert the market to outstanding debts, helping assess risk in credit decisions.

The Over-Indebtedness Law (Law 14.181/2021) does not change this general rule. It was created to protect consumers in a situation of over-indebtedness by organizing debt renegotiations and preserving the minimum standard of living. However, it does not prohibit the inclusion of a consumer’s name in credit registries during the debt collection process. The law only suspends new registrations while negotiations are ongoing and until a payment plan is approved.

There are, however, specific situations in which negative credit reporting is irregular or prohibited, such as:

• Debts older than 5 years: after this period, the name must be removed from registries, even if the debt still exists.
• Lack of prior notification: the consumer must be informed of the debt, the amount owed, and the deadline for payment. Without this, negative reporting can be considered improper and may result in compensation for moral damages.
• Debt disputed in court: a judicial decision can suspend the negative reporting until a final ruling is made.
• Debt already paid: the creditor is obligated to request the removal of the record. Failing to do so can lead to legal consequences.

On the other hand, situations such as unemployment, reduced income, or simply claiming that the debt is not recognized do not in themselves prevent negative credit reporting.

Knowing exactly when and how a name can be added to credit registries helps consumers identify irregularities and protect their rights, rather than believing in myths or non-existent laws.

Source: https://www.serasa.com.br/blog/lei-que-nao-pode-negativar-nome/