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Facing a situation of insolvency, or accumulating debts that far exceed an individual’s or a self-employed person’s income capacity, is one of the most stressful experiences one can go through. The constant pressure from banks and debt collection agencies, combined with the fear of asset seizure, takes a direct toll on both financial and emotional well-being. However, the current legal framework offers a definitive solution: the Second Chance Law.
This legal mechanism is designed to allow individuals and the self-employed to legally discharge their debts when they are unable to meet their obligations, enabling them to restart their economic lives without a perpetual burden. At ActumAdvocats—a leading firm in Girona specializing in banking law and insolvency—we guide you through the entire process to secure the discharge of your debts and help you regain your peace of mind.
What is the Second Chance Law?
The Second Chance Law is a legal mechanism enacted in Spain to provide protection to individuals—including both private citizens and the self-employed—who have acted in good faith but are unable to meet their payment obligations.
The primary objective of this procedure is to obtain what is known as an EPI (Exoneration of Unsatisfied Liabilities)—a judicial ruling that formally cancels a debtor’s debts. In this way, an individual is spared from being condemned to lifelong financial dependency, allowing them to once again own property or start a business without the fear of future asset seizures.
Requirements for Qualifying Under the Second Chance Law
To apply for debt cancellation through this procedure, the law establishes a series of fundamental requirements that must be strictly met:
1. Being a Good-Faith Debtor
This is the central pillar of the process. A debtor is considered to be acting in good faith if they have not caused their own insolvency through fraudulent means, and have not been convicted of socioeconomic crimes, offenses against property, or document forgery within the last ten years.
2. Insolvency situation
It is necessary to demonstrate that it is not possible to meet payment obligations on a regular basis, or that this impossibility will be imminent in the coming months.
3. Having more than one creditor
The procedure requires that there are at least two different creditors. They can be banking, financial institutions, suppliers, Social Security or the Tax Agency itself.
4. Not having recently applied for the law
A security period must be respected if this mechanism has already been used in the past (generally between 2 and 5 years depending on the type of exemption used previously).
The main objective of this procedure is to obtain the so-called EPI (Exoneration of Unsatisfied Liabilities), which is the judicial resolution that formally cancels the debtor’s debts. In this way, an individual is spared from being condemned to lifelong financial dependency, allowing them to once again own property or start a business without the fear of future asset seizures.
Steps in the procedure to discharge your debts
Following recent legal reforms, the process has been significantly streamlined, eliminating the requirement—in most cases—to go through a phase of reaching an out-of-court payment agreement. Below, we outline the main steps:
Insolvency Analysis
Filing for Insolvency (Immediate halt to asset seizures/garnishments)
Option A (Left): Payment Plan (Retain home/assets)
Option B (Right): Liquidation of Assets (Full and direct discharge)
(Combination of both paths)
Selecting the discharge route
Granting of the EPI (Discharge of Liabilities)
Step 1: Feasibility assessment and document gathering
The first step involves a thorough analysis of the debtor’s financial situation. At ActumAdvocats, we review all loan agreements, credit cards, mortgages, and public debts to determine whether the requirements are met and to identify the best legal strategy.
Step 2: Filing the judicial insolvency applicationThe procedure is initiated before the appropriate commercial court (in Girona, these are the courts specialized in commercial matters). Filing this application achieves a crucial immediate effect: the halting of all asset seizures and debt enforcement actions, as well as an end to harassing calls from debt collection agencies. Step 3: Choosing the Path to Debt Exoneration
Currently, the law provides two main options for debt exoneration:
Exoneration via a payment plan (without liquidation): This allows you to retain your primary residence and other business or personal assets by establishing a customized payment schedule (typically over 3 to 5 years) for the portion of the debt that can be repaid. The remaining debt is then exonerated.
Exoneration via liquidation of assets: If the debtor has no assets, or prefers to liquidate their estate to become completely free of financial burdens, assets are sold to satisfy as much of the debt as possible, and the entire remaining balance is cancelled.
Step 4: Obtaining the BEPI/EPI and Removal from Debtor Registries
Once the judge formally grants the exoneration of debts, the creditors are notified. From that moment on, the debts legally cease to exist, and an order is issued to remove the debtor’s data from credit bureau registries (such as ASNEF or RAI).
Why trust ActumAdvocats in Girona?Navigating insolvency proceedings requires expert insight and a personal, attentive approach. At ActumAdvocats, our team of lawyers—specializing in banking and real estate law in Girona—offers you:
Personalized advice: We analyze your specific situation to determine the best legal path (e.g., protecting your primary residence, reviewing unfair banking clauses, etc.).
Comprehensive support: We handle all negotiations, legal procedures, and representation in court. Empathy and transparency: We understand the distress caused by debt, and we offer you clear answers—with no fine print—delivered with the utmost professionalism.
If debt is holding you back, don’t wait for the situation to get worse. Contact ActumAdvocats in Girona and take the first step toward regaining your financial freedom.
