Yesterday, March 2, 2020, Royal Decree-Law 1/2015, of February 27, on the second chance mechanism, reduction of the financial burden and other measures of social order, which has commonly come to be called "Second Chance Law".
The significance of the measure is high because, after a previous failed attempt, this is the first time in Spain that the debtor (including natural persons) has been recognized the right to extinguish their debts definitively. This right has been recognized for some time in neighboring countries, especially in Anglo-Saxon countries, where the tendency is to prevent the entrepreneur who closes a business from being burdened (and stigmatized) for life and unable to start a new project again.
In order to obtain this benefit from the exoneration of the unsatisfied liability, the debtor must present the corresponding bankruptcy, which must conclude in liquidation due to insufficient assets, that is, sufficient assets to make payment to all creditors.
The new rule requires the debtor to have acted with good faith. It will be understood that it concurs good faith when:
The contest has not been found guilty.
That the debtor has not been convicted of crimes against property, public finances, document falsification, socioeconomic order.
That you have reached, or at least proposed, an out-of-court settlement of payments with your creditors.
That the credits against the estate and the privileged credits have been satisfied in their entirety. In case of not having presented an out-of-court settlement of the payments, that the ordinary credits have been satisfied by at least 25%
The exemption benefit will be extended to the unsatisfied part of the outstanding credits on the date of the conclusion of the contest, except credits with special privilege, for which this benefit will be extended to the part of the same that has not been satisfied in execution .
The debts thatare not exonerated, they will be satisfied by the debtor for a period of FIVE YEARS
The creditor may request, within this period of FIVE YEARS, the revocation of the bankrupt's debts exoneration if he proves that he was not so in good faith, if he breaches the payment plan for pending debts or if his financial situation substantially improves.
Once said period has elapsed without a request for revocation, the Judge will issue an Order acknowledging with definitive character the exoneration of debts of the bankrupt.
The Government has finally given the green light to this important legislative reform that had been so demanded and that will benefit thousands of entrepreneurs who carry out their activity as natural persons (self-employed).