Insolvency Proceedings for Individuals: How does the Second Chance Law help you in Malaga?

Are you trapped in a sea of debts and do not know how to get out? If you are self-employed or private and you find yourself in a situation of insolvency, you should know that there is a legal mechanism designed precisely to offer you a solution: the Second Chance Law. At Tecem Abogados, based in Malaga and Benalmadena, we have been helping people like you for years to regain control of your financial life.

In this article we explain how insolvency proceedings for individuals work, what the Second Chance Law consists of, and how we can accompany you throughout the process so that you can start from scratch… legally.

What is a natural person contest?

Insolvency proceedings are not exclusive to companies. Individuals can also file for bankruptcy when they are unable to pay their debts. This includes both self-employed and individuals without business activity.

The objective of the insolvency proceeding is to put the debtor’ s economic situation in order, suspending executions, reviewing liabilities and seeking agreements with creditors. If it is not possible to reach an agreement, the exoneration of unsatisfied liabilities (EPI), i.e., the legal cancellation of debts, may be reached.

What is the Second Chance Law?

The Second Chance Law ( as amended by Law 16/2022) allows individuals with accumulated debts, often through no fault of their own, to cancel all or part of their liabilities and start over without unsustainable financial burdens.

Basic requirements:

• Be a natural person (self-employed or individual).
• Be in a situation of actual or imminent insolvency.
• Acting in good faith (cooperating with the justice system, not having concealed assets or fraudulently generated debts).
• Not having been convicted of serious economic crimes in the last 10 years.

Phases of the procedure

The procedure is divided into three main phases:

1. Attempted out-of-court payment agreement (voluntary as of 2022)

It used to be mandatory, but since the reform it is no longer mandatory. If desired, an agreement can be negotiated with the creditors to split the debt or reduce interest. If this fails, the company is placed in insolvency proceedings.

2. Back-to-back competition

It is filed with the court. An insolvency administrator is appointed to review the debtor’s assets. If there are no assets to liquidate or if these are insufficient, the petition for exoneration is processed directly.

3. Request for exemption from unsatisfied liabilities (EPI)

Here the cancellation of the debt is requested. The new law allows two ways:

• Exoneration with liquidation of the estate.
• Exemption with a 3 to 5 year payment plan (ideal if you want to keep your primary residence).

What debts can be cancelled?

With the Second Chance Law, it is possible to cancel up to 100% of your debts, including:

• Personal loans.
• Credit cards.
• Microloans.
• Personal guarantees.
• Debts with the Treasury or Social Security (up to a certain limit).

Important: debts for alimony, criminal sanctions or serious fines cannot be exempted.

Why do it with a specialized lawyer?

Although the Second Chance Law is designed to protect the citizen, it is a legally complex process. Being accompanied by a law firm such as Tecem Abogados, with experience in bankruptcy and civil law, significantly increases your chances of success.

We help you with:

• The complete study of your case and legal feasibility.
• The filing of the court application.
• The elaboration of the payment plan, if you need it.
• Communication with the insolvency administration and creditors.
• Your defense before the judge to obtain final exoneration.

How long does the process take?

The duration depends on each case, but in general terms:

• If settlement is chosen, it can be completed in 9 to 12 months.
• If the payment plan is chosen, the duration is 3 to 5 years, but during that time there are no liens or creditor calls.

How much does it cost?

In Tecem Abogados we offer closed and affordable budgets, with the possibility of splitting the payment. Our goal is to help you, not to add more burdens. In addition, the first consultation is free, so you can know your options without obligation.

Your second chance starts today

No one deserves to live in fear of their debts. If you meet the requirements, the law protects you. Canceling your debts is possible, and at Tecem Abogados we want you to do it with security, legal support and proximity.

If you are in Malaga or Benalmadena and want to find out how to get started, contact us today.

Do you want to know if you can cancel your debts?

Request your consultation at Tecem Abogados.

We explain if you can take advantage of the Second Chance Law.
We evaluate your case without cost or obligation.
Start your new life, debt free.

Do not hesitate to contact us through our website or from our contact section.