CIMS JURIDICS SLP specialists in the Law of Second Chance.
“The procedure is governed mainly by the good faith of the debtor, and is the main axis that can lead to a favorable outcome of the whole process.”
What is the Second Chance Law?
It is a very useful mechanism, a complete and total help for those people who are very indebted and the executions and debts do not allow them to go ahead, with the prospect of losing their home, seeing their salary seized, and so on.
These people, debtors in good faith, see how they can come to the surface and start again without debt, but also without property, as all the non-essential properties of the debtors must be liquidated.
It is always advisable to get advice when the first liquidity problems and the first defaults start. An early solution avoids further problems, when judicial, administrative and interest and cost embargoes have already occurred. It should be noted that this procedure is governed primarily by the good faith of the debtor, and this is the main axis that can lead to a favorable outcome of the whole process.
In which cases can a person affected by debt go there?
The Second Chance Act is intended for individuals and the self-employed. What is intended with it is that the affected debtor is exempt from private debts that may have both private creditors and credit institutions, banks and public debt (debt with public bodies such as finance, social security, provincial councils…) . The requirements for an individual or self-employed person to be eligible for the Second Chance Act are mainly: to prove that they cannot meet their debts because they do not have sufficient income or because they do not have assets that can be settled to cover them. to them or that it has already been settled and yet the debts persist; that the amount due cannot exceed 5 million euros; and that the affected debtor proves that he is in good faith.
What steps should be followed?
The process has mainly two phases. The first is the bankruptcy mediation phase, in which the affected debtor, through his lawyer, requests that a bankruptcy mediator be assigned to him so that he can negotiate with his creditors the possible payment of the debt on a deferred basis. This proposal may or may not be accepted by creditors. If accepted, a deferred payment plan would be drawn up to gradually satisfy the credits until the total agreed with the creditors has been settled. Otherwise, we would enter the second phase
And what is it?
That of the consecutive insolvency, which consists of asking the Judge to exonerate or forgive the affected debtor all debts. This will require demonstrating the good faith we talked about earlier, consisting of proving that we have done our best to pay off the debts (as with properties) and yet we have not been able to. In the event that the affected debtor does not have assets to be able to settle, with the application for consecutive bankruptcy, the debt relief is requested directly.
Public debts, according to the Bankruptcy Law, cannot be exempted, although the jurisprudence has clarified these regulations, allowing a part of them to be exempted in exchange for presenting a 5-year payment plan for the part that cannot be exempted.
