New Bill Aims to Tackle Argentina‘s mounting Debt Crisis with Prevention, Mediation & Rehabilitation
BUENOS AIRES – A proposed new legal framework seeks to address Argentina’s widespread household debt, impacting an estimated 91% of the population, according to official data cited by sponsoring Deputy Agost Carreño. The bill establishes a comprehensive regime for the prevention adn treatment of over-indebtedness, focusing on proactive solvency evaluations by financial institutions and accessible pathways for debt restructuring.
The proposed legislation mandates that banks, credit card companies, digital wallets, mutual funds, and cooperative lenders conduct objective solvency assessments before extending credit. Crucially, it introduces a free and optional administrative mediation process - a prerequisite to legal action – designed to facilitate agreements between debtors and creditors.This mediation would allow for the negotiation of restructuring plans spanning up to five years,capped at interest rates equivalent to the active rate of the National Bank,and prohibiting the capitalization of interest.
Should mediation fail, debtors can pursue legal recourse through civil, commercial, or consumer courts, triggering a special procedure that instantly suspends executions, the accumulation of judgments, and the submission of punitive interest – with exceptions for debts related to food, labor, or taxes.
Under the proposed system, judges would have the authority to approve payment plans that reduce debtors’ net income by up to 35%, potentially imposing these plans on creditors if deemed equitable. Successful completion of the plan, or five years of adherence to the procedure, would result in the debtor’s rehabilitation and the extinguishment of remaining debt, excluding obligations related to food, labor, taxes, or criminal penalties.
Recognizing the need for preventative measures,the bill also incorporates a compulsory financial education component,encompassing programs in secondary schools and public awareness campaigns for adults,coordinated by the Ministry of Human Capital,the Central Bank,and the National Securities Commission.
“There is no national procedure that guarantees an orderly path of rehabilitation for debtors in good faith,” stated Deputy Carreño, highlighting the legal gap the bill aims to fill, especially in light of a meaningful increase in delinquency rates on credit cards and personal loans.
