By BARRY HATTON
Associated Press
LISBON, Portugal — Nuno Pinto is 40, out of work and contemplating a step he thinks is the only way out of his family’s financial plight: personal bankruptcy.
Pinto, like many Portuguese, is financially stranded. He has no income, and gets by with the help of his elderly parents, but repayments on loans he took out before Portugal was engulfed by a financial crisis keep falling due.
Personal bankruptcies last year outnumbered company bankruptcies, accounting for 55 percent of all insolvencies in Portugal. It’s the first time that has happened and is part of a gloomy catalog of record-breaking statistics.
Portugal’s vulnerable, debt-riddled economy was crushed last year by Europe’s sovereign debt crisis. Portugal had to follow Greece and Ireland and take a $103 billion bailout to dodge national bankruptcy.
Lenders demanded debt-reducing austerity measures that have helped pitch the country into a steep decline. It is in its second straight year of worsening recession, and unemployment has climbed to a record 14.8 percent. Portugal’s continuing troubles could yet provide the spark for another European financial emergency.
“I’m up to my neck in debt,” Pinto said during a recent visit for legal advice at the Portuguese Consumer Defense Association in Lisbon.
He’s close to defaulting on his mortgage and, along with his partner and 9-year-old daughter, faces imminent eviction.
“I’m here to see if I can get what’s my last chance — personal bankruptcy,” says Pinto, a burly man with gray hair and beard. Gaining insolvency through the courts would allow him to renegotiate a special repayment plan with creditors.
Stories like Pinto’s aren’t hard to find these days in Portugal, a country of 10.6 million people enduring its worst hardship in recent memory.
The Portuguese are paying a heavy price for their country’s failure to move with the times over the past decade.
Portugal’s calcified economy has produced almost no meaningful growth in a decade.
Pinto is one of the more than 670,000 Portuguese who last year defaulted on their loans — a 5 percent jump on the previous year.
Defaults on consumer credit amounted to $2 billion in January, a 14 percent increase since last May’s bailout. It’s the highest level of unpaid private debt since the Bank of Portugal started keeping detailed records 15 years ago.
