Bombshell! FITU Proposes Debt Forgiveness and Interest Rate Cap in Credit Emergency Law

In the midst of the economic crisis suffocating millions of Argentines, the Left and Workers’ Front – Unity (FITU) turned up the pressure in Congress with a bill that promises to be a cold shower for banks and a lifeline for indebted families. Deputies Myriam Bregman, Nicolás del Caño, Romina Del Plá, and Néstor Pitrola introduced an initiative declaring a Household Credit Emergency for two years, with the possibility of extension, and establishing drastic measures to ease the burden on workers.

The bill, which is already stirring controversy in financial circles, proposes the total forgiveness of debts of up to two basic baskets for the hardest-hit sectors. Who qualifies? Those with incomes below the Basic Poverty Basket, or whose spending on food, utilities, rent, and maintenance fees exceeds 70% of their income. Also included are those laid off from the state, unemployed for more than three months, retirees with insufficient benefits, people with disabilities, and those who lost social plans. For any balance exceeding that amount, a 50% reduction of principal and a zero-interest refinancing plan apply.

But it doesn’t stop there. For those earning up to 1.5 times the basic basket but not falling into the previous category, a refinancing with a 50% reduction and an interest rate that cannot exceed wage growth or inflation, whichever is lower, is established. And to prevent the cycle of indebtedness from recurring, a cap is set on interest rates for personal loans and credit cards: they cannot exceed the variation in registered wages (CVS-Indec).

Additionally, the initiative suspends wage garnishments and inclusion in the BCRA’s debtor registries (CENDEU) and Veraz for those with arrears over 90 days. It also creates an independent audit and control commission, made up of indebted families, specialists, union members, and neighborhood leaders, to ensure compliance.

“We propose this bill as an emergency measure in the face of the crisis, an economic and financial relief for working families,” Del Caño posted on social media. The bill’s rationale directly targets Javier Milei’s government: it denounces that over-indebtedness is not the result of households’ financial speculation, but a “survival mechanism” triggered by austerity, wage devaluation, and rising utility rates, rents, and food prices. “It is a consequence of the adjustment policies, wage and financial suffocation of Milei’s government and all its accomplices, who do not hesitate to continue increasing external debt,” the lawmakers argue.

The initiative comes at a critical moment: more than 5.8 million people have taken out loans to supplement incomes that are insufficient to live on. While banks and fintechs line their pockets with usurious rates, FITU seeks to put a stop to it. Will it manage to impose its law in a Congress dominated by the right? The tug-of-war is just beginning.