Legal
Second Chance Law
Discharge of unmet liabilities for individuals and sole traders facing insolvency. A court-approved route to a genuine fresh financial start.
What is it?
Spain's Second Chance Law (Ley de Segunda Oportunidad, Law 25/2015 as reformed by Law 16/2022) allows individuals — both private individuals and self-employed (autónomos) — who are genuinely insolvent to obtain a court order discharging the debts they cannot repay. This mechanism, formally known as the exoneración del pasivo insatisfecho (BEPI), provides a legally recognised way to start again without carrying unpayable debts indefinitely.
The procedure has two main routes. The first involves the voluntary liquidation of the debtor's available assets, after which any remaining debt is cancelled by the court. The second — introduced by the 2022 reform — allows discharge without full liquidation if the debtor commits to a structured payment plan for up to five years. The 2022 reform also significantly widened access to this mechanism, removing barriers that previously excluded many individuals who genuinely needed it.
At GCT1 we manage the entire Second Chance Law process: from assessing the client's assets and liabilities, through the mandatory out-of-court payment agreement (acuerdo extrajudicial de pagos) where required, to the court proceedings and the final discharge order. Our legal team coordinates with our tax advisors to ensure any fiscal implications of the discharge are handled consistently.
Who is it for?
- Private individuals with unpayable debts — personal loans, mortgages, credit cards — who have exhausted their options
- Self-employed professionals (autónomos) who have wound down their activity leaving debts to suppliers, the Tax Agency, or Social Security
- Individuals who guaranteed third-party debts and have been dragged into insolvency as a result
- Debtors facing active enforcement proceedings or wage garnishments who need immediate relief
- Individuals with debts owed to the AEAT or Social Security that may qualify for discharge under the reformed law
What's included in our service
- Complete insolvency assessment: assets, liabilities, income, and realistic repayment capacity
- Advice on the most appropriate route: asset liquidation with BEPI or structured payment plan
- Out-of-court payment agreement (acuerdo extrajudicial de pagos) where applicable
- Preparation and filing of the consecutive insolvency petition before the Mercantile Court
- Management of the proceedings through to the final court order discharging unmet liabilities
- Coordination with our tax team on the fiscal treatment of cancelled debts
- Guidance on post-discharge obligations and the monitoring period
Documentation you will need to provide
- Full list of debts: amounts, creditors, and current status of each
- Schedule of assets and rights: property, vehicles, bank accounts, salary
- Recent personal income tax (IRPF) returns and, for former autónomos, VAT and social security records
- Loan, mortgage, or financing contracts for the main debts
- Enforcement or court proceedings documentation if any are active
Key deadlines
- The full process typically takes between 6 and 18 months depending on complexity and route chosen
- The out-of-court payment agreement (AEP) has a negotiation period of 2 months, extendable to 3
- The provisional discharge is granted at the close of the insolvency proceedings; the definitive discharge follows the monitoring period
Why GCT1
- Integrated legal and tax expertise: debt cancellation has fiscal consequences that require coordinated advice — a legal team alone is not enough
- Experience with personal insolvency proceedings before the Mercantile Courts in Alicante
- Full-process support: we guide you through every stage from the first assessment to the final discharge order
- Free first consultation to review your situation and assess whether you meet the requirements of the Second Chance Law
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Frequently asked questions
- Who can apply for the Second Chance Law in Spain?
- Individuals — both private individuals and self-employed workers — who are insolvent and have acted in good faith are eligible. The 2022 reform significantly broadened access, removing several requirements that previously limited its use and extending relief to debts owed to the Tax Agency and Social Security.
- Does the process cancel Tax Agency and Social Security debts?
- The 2022 reform brought these debts within the scope of relief, although quantitative limits apply. The extent of the discharge depends on each debtor's situation; we assess case by case which debts can be discharged and which fall outside the process.
- Can I keep my main home if I go through the process?
- This depends on the route chosen and whether the property is mortgaged. Under the asset liquidation route the home may be affected; under the payment plan route it is possible to retain it if mortgage payments continue. We assess each situation individually before recommending the most appropriate option.
- How long does the process take?
- The procedure typically takes between six months and eighteen months, depending on the complexity of the assets involved, the route chosen and the workload of the courts. We manage every stage: from the extrajudicial payment agreement attempt through to obtaining the court's discharge order.
Let's talk about your case
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