The Second Chance Law is a regulation that allows individuals and the self-employed to request the cancellation of debts if they are over-indebted and unable to meet their payments.
Do you have debts? Do you know the Second Chance Law?
The Second Chance Law has been in effect in Spain since 2015 and establishes a procedure for debtors to negotiate with their creditors and, ultimately, request debt cancellation. The law aims to offer a solution to people in dire financial straits who are unable to repay their debts.
Requirements to benefit from the Second Chance Law
These are the requirements to qualify for the Second Chance Law :
- Be a natural person, that is, individuals or self-employed. Companies or other entities cannot qualify.
- Be in a situation of current or imminent insolvency and demonstrate that you cannot pay your debts.
- Having attempted to reach an out-of-court agreement with creditors to pay the debt, by presenting a payment plan.
- Not having been convicted of economic crimes, such as fraud or swindling.
- That the total debt does not exceed 5 million euros.
- Once the requirements are met, the debtor must present the application for acceptance of the Second Chance Law before a judge, who will be in charge of approving it.
If the cancellation of the debts is approved, the debtor must follow a payment plan and comply with certain obligations for a certain period, which can be up to five years.
What does debt cancellation entail?
Meeting the requirements to qualify for the Second Chance Law allows individuals and the self-employed to request debt cancellation:
- The main benefit is the ability to cancel debts that cannot be paid, allowing the debtor to start over without the financial burden of old debts.
- In the event that the judge does not approve the cancellation of all debts, it allows you to establish a customized payment plan that allows you to pay the debts progressively and adapted to your current economic situation.
- If you have guarantors, you can release them from the responsibility of paying the debts.
- Once the established payment period has expired, it allows the exoneration of debts that could not be paid.
- La Second Chance Law establishes measures to protect the debtor's habitual residence, preventing foreclosure in the event that the debtor cannot pay the mortgage.
If you want to cancel your debts and start over without the financial burden of old debts, contact our law firm in Murcia . At ACC Legal Abogados, we have an expert team of lawyers specializing in the Second Chance Law.