The Second Chance Law in eight questions and their answers

The Second Chance Law offers a new opportunity to all those people, whether they are salaried employees, civil servants or even SELF-EMPLOYED, who have a present or imminent debt that they are unable to pay. It is a solution that offers you the opportunity to totally cancel your debts. It is a specific insolvency mechanism for individuals.

Who is it intended for?

It is intended for any natural person. Whether they are salaried employees, civil servants or SELF-EMPLOYED.

What are the requirements?

The current requirements, although they will probably be relaxed with the new reform of the Insolvency Law, are the following:

1- Your debt does not exceed five million euros.

2- That there is good faith on the part of the debtor.

3- Demonstrate that you do not have assets to meet the debts or that these have already been liquidated.

4- To have at least two different creditors.

5- Not to have been benefited by this Law in the last 10 years from the sentence.

6- That you have not been declared guilty in another insolvency proceeding previously.

7- Not to have a criminal record in terms of: Against the patrimony, against the socio-economic order, the public treasury, the social security, documentary falseness, nor against the rights of the workers.

8- Not having rejected a job offer suitable to your abilities during the 4 years prior to the application for the Second Chance.

What are the benefits that you can obtain thanks to this law?

You will be able to apply for financing again, you will disappear from the delinquency lists, you will be able to have credit cards again and start a new life.

What does this procedure consist of?

It consists of two phases. Initially, an out-of-court phase is carried out in which an attempt is made to reach a payment agreement with the creditors. This phase may not last more than two months as established by Law.

If the two months have elapsed without an agreement, the judicial phase, the consecutive insolvency proceeding, will begin. During this phase, the Judge may exonerate 100% of the debt.

Can any person be eligible, regardless of his or her salary?

Yes, anyone can apply. Whether you are self-employed or salaried. The only thing that must be taken into account is that the debt does not exceed five million euros. However, the law does not establish the legal minimum to be able to apply for the Second Chance.

Are the debts eliminated forever?

The debts will effectively disappear when five years have elapsed since the sentence.  During this period, they will not have to be paid, but this is the period that is stipulated so that the case can be reviewed, if the creditors request it. They could do so, for example, if it is suspected that the debtor has not acted in good faith.

As far as the future is concerned, a person who has already benefited from the Second Chance Law could do so again in the future, provided that the insolvency proceeding is not requested within 10 years.

What will be affected by the draft reform of the bankruptcy law approved last month by the Council of Ministers?

It intends to reform in depth the second chance procedure with the aim of encouraging the beneficiaries to continue with their work or business activity and making possible a really effective second chance.

It highlights the possibility of exoneration without prior liquidation of the debtor’s assets and with a payment plan to creditors, allowing the debtor, under certain conditions, to keep his habitual residence and, if he/she is self-employed, to continue with his activity.

The payment plan will have a maximum duration of three years, which will be extended to five years when the debtor’s habitual residence is not disposed of.

The list of exonerable debts is extended and certain restrictions to be able to access the exonerations are eliminated or relaxed.

Therefore, as soon as it enters into force, the conditions to access the second opportunity will be more flexible and the probabilities of debt cancellation will be higher.

Why are we Moya&Emery the best to help you in this matter?

Currently we have achieved a 100% success rate in all our cases. Therefore, we encourage all those people who are in a situation of current or imminent insolvency to visit us and we will study their case without obligation.

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