Second Chance Act
Lawyer for Professional and Business Services in Axarquia
Lawyer specialising in Second Chance Law
There are many people who, whether due to bad fortune, bad personal or business decisions, or a host of other possible causes, find themselves immersed in a volume of debt that they will be unable to cope with, either with all their present assets or with those they may generate in the future.
Until not so long ago, this situation could be irreversible, so that people were burdened for life with this debt, making it impossible for them to aspire to start a new business or professional activity, or to obtain financing to buy a home, among other difficulties, such as wage garnishments, transfer of debt to future heirs, and so on.
This situation changed in 2015 with the passing of Law 25/2015 on the second chance mechanism, reduction of the financial burden and other social measures, known by all as the second chance law, which modified the Insolvency Law by introducing this new mechanism.
When we talk about the Second Chance Law, we are talking about an arrangement with creditors, also known as bankruptcy proceedings, but with certain particularities designed for individuals or natural persons, i.e. not being a company. Although all companies are obliged to file for bankruptcy when they foresee that they will not be able to pay their ordinary obligations and debts, this has always been a mechanism whereby the company's assets were liquidated in order to pay creditors in an orderly fashion, according to the established order and rules, but it did not and does not have to imply a total remission of what is owed once the assets have been liquidated.
The main novelty of this mechanism within the insolvency proceedings is that, provided that the debtor meets certain requirements (being in good faith, having no assets, not having used this mechanism in the previous 5 years, not having a criminal record for economic crimes, attempting to reach an agreement with creditors...), the insolvency judge may waive the part of the debt that the debtor is objectively unable to pay.
This is a procedure in which certain professionals, such as a notary or commercial registrar, lawyer, solicitor and insolvency mediator (who may also be a lawyer or economist) must be involved, and which is relatively quick and simple. However, it should be borne in mind that the backlog and the accumulated collapse of the courts may be the main stumbling block in the process, so it will be necessary to have at least 1 year to complete it.
Montosa Abogado will assist you from the first to the last moment of the procedure, informing you about the convenience or not of carrying it out, the way to do it and the costs. Thanks to this legal mechanism and well advised by a lawyer, it is possible to make a fresh start by leaving past debts behind.