The Second Chance Act: procedure and practical insights
The Second Chance Law (Ley 25/2015) allows individuals and self-employed workers to discharge their debts when they face an insolvency situation that cannot be overcome through ordinary means.
Who can apply?
Any individual — whether employed or self-employed — who meets the following requirements:
- Be in a situation of current or imminent insolvency.
- Have acted in good faith: not having been convicted of financial crimes in the last 10 years.
- Have attempted an out-of-court payment agreement with creditors.
- Not having obtained the discharge benefit in the previous 5 years.
Stages of the procedure
- Out-of-court negotiation — A bankruptcy mediator is appointed to convene creditors and attempt to reach a payment agreement.
- Consecutive bankruptcy proceedings — If no agreement is reached, simplified bankruptcy proceedings are opened before the court.
- Discharge of unsatisfied liabilities (BEPI) — The judge may discharge outstanding debts if the legal requirements are met.
Which debts can be discharged?
Most debts can be cancelled:
- Personal loans and credit cards
- Debts with suppliers
- Unpaid invoices
Not dischargeable: maintenance debts, those arising from non-contractual liability for wilful misconduct, and debts with the Tax Agency or Social Security above certain thresholds.
How long does the process take?
The full procedure usually takes between 6 and 18 months, depending on the complexity of the case and the workload of the competent court.
Conclusion
The Second Chance Law is a real and effective tool for anyone drowning in debt. If you find yourself in this situation, it is important to act as soon as possible and seek specialised legal advice.
If you need guidance on your specific case, you can request a consultation.
