The central hypothesis of this research posits that enhancing literacy regarding debt obligations significantly attenuates the probability of systemic over-indebtedness and personal insolvency. By bolstering borrower creditworthiness and strategic financial foresight, such literacy reduces the asymmetric information and credit risk perceived by financial institutions, thereby facilitating a substantive and measurable reduction in applied interest rates. This structural mechanism is particularly critical for low-income households, who remain the most susceptible to predatory lending, debt traps, and the compounding effects of escalating financing costs.

To rigorously evaluate this hypothesis, we examine the empirical relationship between targeted financial literacy interventions—specifically those designed to incentivize disciplined debt repayment—and their subsequent longitudinal outcomes on household leverage levels and institutional credit risk metrics. Utilizing a comprehensive dataset from Ecuador encompassing nearly 2,000 individuals tracked between 2023 and 2024, this study employs a quantitative approach to assess the efficacy of financial education in fostering long-term economic stability and inclusive growth. The findings suggest that educational proficiency in financial management acts as a non-traditional collateral, lowering default probabilities and optimizing the credit market's efficiency. Consequently, the study advocates for the integration of financial literacy into public policy as a primary tool for poverty alleviation and the strengthening of the national financial architecture.