Mariela Espino, the general manager of BROU, was optimistic about the initial results of the program, indicating that it is an exceptional measure. “The evaluation is very good,” said Espino, stressing that the initiative seeks to “resolve the situation of families and individuals due to all the impacts that the pandemic may have caused them.” This restructuring is a unique solution that responds to the extraordinary circumstances caused by the global health emergency.
In an interview with Channel 5, Espino explained that the conditions to qualify for the program are specific: “The conditions that people must have to qualify for this solution are to have a debt of less than $100,000 for capital alone, without considering interest and to be rated in category 5, that is, to have the worst category of arrears in the Central Bank’s rating, now and in April 2022, which is when the pandemic ended,” he explained.
Program details and benefits
The program offers significant facilities for debtors. Those with debts between $5,000 and $100,000 can finance the capital in 36 months without additional interest or late payment penalties, ensuring fixed installments during the restructuring period. This approach aims to mitigate the financial burdens on affected families.
Reaching beyond BROU: ABPU and ANEAC initiative
At the same time, the Association of Private Banks of Uruguay (ABPU) and the National Association of Personal Credit Management Companies (ANEAC), in coordination with the Central Bank of Uruguay (BCU) and with the support of the Consumer Protection Unit of the Ministry of Economy and Finance (MEF), have launched a program to forgive and refinance bad debts.
Since its launch last Thursday until Monday afternoon, approximately 250,000 people have made inquiries about this initiative, and almost 27,000 of them have formalized more than 35,000 agreements for the cancellation of debts.
Specific conditions and objectives of the program
This program also contemplates specific conditions for different debt levels. For principal debts of less than $5,000, institutions will waive collection without requiring any paperwork on the part of the debtor. For debts between $5,000 and $100,000, the option of refinancing in 36 installments without interest or surcharges will be provided.
The objective is to offer a long-term solution to approximately 786,300 delinquent debtors who, according to records from the Credit Risk Center managed by the BCU, were considered uncollectible as of April 30, 2022 and remain in this category until May 2024. The idea is to give them the opportunity to regularize their situation and clean up their credit history.
The participating entities are finalizing the details on how the restructuring plans will impact the credit histories of the debtors. This impact is intended to be immediate for those with debts of less than $5,000, thus allowing their histories to be “clean or with a mark.” For those who opt for refinancing in monthly installments, different alternatives are being evaluated to fairly and effectively reflect their compliance.
Likewise, the relevant legal provisions are being considered to determine how these changes will be recorded in the debtor category according to the Central Risk Office of the BCU. The ultimate goal is for debtors to be able to see their positive compliance reflected quickly, thus encouraging a culture of responsibility and timely payment.
The response to these measures could make a significant difference in the post-pandemic financial landscape, providing relief and stability to thousands of financially vulnerable individuals and families.
