The perfect storm of a fully escalating Euribor and inflation, at values much higher than what we have been used to in recent years, are affecting the fragile economies of many self-employed workers and individuals. This translates into greater indebtedness, which often exceeds the ability to meet ordinary payments. In this context, the figure of the Second Chance Law, something like el contest of creditors for people appears as a feasible option. These are the steps to follow for your application and the requirements that must be met. If not, warns Susana Álvarez from Legálitas, there is a risk of falling into “a impossible-to-exit spiral of over-indebtedness».
When to go?
In the moment in which it is not possible to satisfy our ordinary payments, and we find ourselves in a situation of insolvency, it is time to consider this way out. “The solution you are going to find is much easier and more effective than starting to look for private loans,” said Legálitas’s lawyer, who maintains that she gives greater guarantees than doing it privately. Along similar lines, the lawyer at Sanahuja & Miranda Abogados and a member of the Barcelona Legal Circle, Jorge Fernández, believes that it can “be useful for exonerate or obtain forgiveness and become debt-free to be able to start a professional or commercial activity without debt”. In addition, he adds, it is very useful for people who do not have any assets to liquidate and for those people who «for example, have their habitual residence whose value is less than the mortgage loan that they still have to pay. It would be considered a contest without mass “. Similarly, he adds, that it would not be appropriate if the person does not want to see his assets affected or liquidated to obtain the exoneration.
«It may not be interesting for those self-employed who have public law credits (Tax agency Y Social Security) since this group is the one who normally contracts this type of debt”, warns Fernández, since he establishes a maximum exemption of 1, euros in the two cases mentioned. This may mean that they are not released from all the debt and cannot obtain the certificate of this payment current with the Treasury and Social Security. In this sense, it is committed to the fact that this type of debt is completely exonerated for the self-employed “because they normally generate this type of debt, because they have to submit to deferrals that are later not voluntarily breached.” A similar case for individuals. Nor does he see well that “non-exemptable credits are claimed in full.”
Result: Payment agreement or exemption
There are two possible results for those who use the Second Chance Law, either because of the extrajudicial way either directly in court: a payment agreement (with new terms and amounts to be paid) and the exoneration of the debt. “The latter can only be granted by the judge,” emphasizes Álvarez (Legálitas). An important notice, there are two limitations when resorting to this regulation: You cannot go to it in 1 years and only up to a maximum of 5 million euros.
What is the procedure?
The most recent reform of the Second Chance Law (Law 25/215), which entered into force in September, brings some important novelties to a procedure that has a double track: the extrajudicial and the judicial. The first involves reaching a voluntary agreement with the creditors, through a mediator and a notary to try to reach an understanding. Specifically, the lawyer for Legálitas has pointed out, “a payment schedule is proposed according to the assets that the person has” or “extrajudicial payment proposal”. This may mean lengthening payment terms, as well as a significant haircut.
The second route is the judicial one and has the commercial courts as its setting. A lawsuit is filed «in which he well indicates that he cannot offer anything and, directly request the exoneration of the debt, or if you have any assets you can propose its liquidation in the lawsuit itself, “explains Susana Álvarez. That is, creditors are offered a liquidation proposal to distribute what is earned among the debtors. “There are times when houses have been offered as property, but with a mortgage that must be up to date. Now with the latest reform, if it is mortgaged and I usually live in it, it cannot be considered an asset for these cases », she commented.
Fernández (Sanahuja & Miranda Abogados) considers that a process in which an individual only has debts, without assets to liquidate, would be Submit the application for insolvency in the commercial courts and, later, the creditors would be informed through the publication of an edict if they want the appointment or not of a bankruptcy administrator. If this is not the case, the debtor is given a term to ask for the forgiveness of the debts and we would already be ending the contest ». In his opinion, everything will depend on the jamming of the court and whether there is a bankruptcy administrator or not.
Finally, the judge is the only one who can issue an exoneration of the debts after analyzing the case and, if there is a payment proposal on the table, the magistrate “analyzes and requests information creditors, informing them of the situation, and giving them the opportunity to express themselves. In case they say nothing, it is not approved and can exonerate the plaintiffexplains this specialist. Otherwise, the option remains to liquidate the assets.
For his part, the lawyer Sanahuja & Miranda Abogados advises that If you have a lot of debts and you don’t have any assets my advice is to go to the Second Opportunity because you will be able to undertake another activity from scratch». In any case, he does not see it as suitable for small debts with a debtor who has equity, he believes that restructuring is better.
What should the claim contain?
Álvarez (Legálitas) recalls that the lawsuit “informs” the judge of the plaintiff’s circumstances. For this, the following documents are included: economic memory and socioeconomic history of the personthe reasons why we have reached this situation (illness, disability, …), criminal certificate and of not being sentenced in a final judgment in any process of an economic nature, as well as official certificates like marriage, census, payroll, income tax returns, Family Booketc… “It is the equivalent, for example, to the expressive memory of the economic situation of a company in a bankruptcy”, concludes the lawyer of Legálitas.