Can I Be Arrested for a Debt? Asset Concealment Explained

The question is straightforward: can I be arrested for failing to pay a debt? The short answer is: you cannot go to prison simply for owing money. In Spain there is no "imprisonment for debt". However, there is an offence that turns a civil debt into a criminal problem: asset concealment (Art. 257 CP). As criminal lawyers experienced in punishable insolvency, we explain the difference.

Not Paying ≠ an Offence

Failing to pay a debt is a civil breach. The creditor can sue you, seize your assets, claim interest... but cannot send you to prison. Owing money is not an offence.

The offence appears when you conceal your assets so that your creditors cannot collect. That is asset concealment.

What Is Asset Concealment?

Art. 257 CP punishes anyone who "removes their assets to the detriment of their creditors". In practice, it means carrying out acts of disposal of assets to give the appearance of insolvency:

• Putting assets in third parties' names: transferring the house to your partner, the cars to your parents, the company to a frontman.
• Selling assets below their value: selling off assets cheaply so there is nothing left to seize.
• Hiding money: withdrawing cash from bank accounts, moving funds to accounts abroad, using cryptocurrencies.
• Creating fictitious charges: mortgaging properties with non-existent debts to pretend they are already encumbered.
• Closing the company and opening another: dissolving a company with debts and creating a new one with the same clients and employees.

Penalties for Asset Concealment

• Basic offence (Art. 257.1): 1 to 4 years in prison and a fine of 12 to 24 months.
• Aggravated offence: if the debt is a public-law debt (Tax Authority, Social Security): a prison sentence in the upper half.
• Punishable insolvency in insolvency proceedings (Art. 259): if fraudulent insolvency proceedings are declared: 1 to 4 years in prison.
• Civil liability: nullity of the fraudulent transfers + compensation.

Defence Strategies

• Real sales at the market price: showing that the transfers were legitimate commercial operations at a real price.
• There was no prior debt: asset concealment requires that the debt existed before the acts of concealment. If the debt is later, there is no concealment.
• Real, not simulated, insolvency: the situation of insolvency is genuine and not the result of deliberate acts of concealment.
• Absence of harm: the creditor can collect from other assets of the debtor. If there is no actual harm, there is no offence.
• Limitation: the offence becomes time-barred 5 years after the last act of concealment.

Warning Signs: Am I Committing Asset Concealment?

If you are doing any of these things to prevent your creditors from collecting, you could be committing asset concealment:

• Putting the house in your partner's name "just in case".
• Withdrawing cash and keeping it at home.
• Closing your company with debts and setting up an identical one.
• Donating assets to relatives.
• Getting paid off the books so it does not appear in your accounts.

If you are in this situation, stop and consult a lawyer. There are lawful ways to manage insolvency without committing an offence.

We defend both those accused of asset concealment and harmed creditors. Call us on +34 91 078 65 74.