Legal Framework of Guarantees


On October 31, 2023, Law 14.711 of 2023, known as the ‘Legal Framework of Guarantees,’ was sanctioned, establishing a new paradigm for the use of assets as collateral in multiple loans. This measure, widely discussed and finally approved, aims to facilitate access to credit by making the use of guarantees more flexible, consequently stimulating the economy. However, parts of the text that would facilitate the repossession of vehicles without judicial intervention were vetoed, a point that sparked debates about individual rights and guarantees.

Law 14.711/2023 originates from Bill 4,188/2021 and represents a milestone in the Brazilian credit system, allowing an asset already used as collateral in one loan to be used again as collateral in new debts, within certain limits. This paves the way for debtors to maximize the use of their assets without compromising the legal security of the transactions.

For example, if a property was used as collateral for an R$80,000 loan, it would be tied to that single operation until the debt was settled. With the new framework, the uncommitted value of the property (in this case, R$220,000) can be used as collateral in new credit operations, allowing the owner to maximize the use of their asset without the need to fully liquidate the first debt.

A major innovation of this law is the introduction of the ‘guarantee agent.’ This agent will have the responsibility of registering and managing the guarantees on behalf of the creditors, and may even execute guarantees extrajudicially when permitted. This figure emerges as a facilitator in credit transactions, ensuring that the rights of creditors are effectively and efficiently protected.

Presidential Vetoes The executive power vetoed the sections that would allow the repossession of vehicles by creditors without the need for judicial authorization. The government defended this veto by arguing that such a measure could infringe upon fundamental rights and guarantees of individuals, as well as represent a violation of the judicial reservation clause. This decision highlights the government’s commitment to protecting individual rights, even in the face of seeking efficiency in the credit recovery process.

New Facilities and Innovations The law also introduces measures aimed at modernizing and making the management of debts and credit recovery more efficient. For example, it allows debt notifications for unpaid debts to be sent via messaging apps, such as WhatsApp, facilitating the communication process between creditors and debtors.

Furthermore, it encourages debt renegotiation by allowing creditors to propose, through notaries, measures to facilitate debt settlement. This includes the possibility for debtors to settle their debts more advantageously, assuming the associated costs of the process.

Another significant innovation is the permission for notaries to issue certificates of life, marital status, and domicile, facilitating administrative and legal procedures for citizens.

Thus, the Legal Framework of Guarantees will provide greater flexibility in the use of guarantees in credit operations. With these changes, not only is easier and more accessible credit expected, but also the adoption of fairer and more balanced practices in the Brazilian financial market.”


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