Brazilian courts curb low‑value bank debt and pension loan abuses

The National Council of Justice (CNJ) approved Resolution 683/2026, which authorises judges to extinguish executions of extrajudicial bank titles valued under R$ 10,000 when the debtor or any seizable assets cannot be located and no objections are pending. Judges must notify the bank, which has 15 days to propose an address, indicate assets, or present new evidence. The measure targets the judiciary’s backlog—86.9% congestion in first‑instance courts and more than 4.3 million pending cases—as of April 2026, aiming to free resources for higher‑value disputes. The rule does not erase the debt; banks may file a new action after the prescription period.

In a separate decision, the Superior Tribunal de Justiça (STJ) ordered banks to refund amounts and fees deducted from INSS pensioners in illegal payroll‑loan contracts. The court emphasised that contracts with illiterate borrowers must satisfy statutory formalities—such as signature à rogo and two witnesses—even when concluded through digital channels. The use of a chip‑enabled card and password does not replace these requirements. Several contracts were annulled and full restitution of charges, including credit‑card fees and overdraft fees, was mandated.