Criminal Lawyers in Second Chance Law

The Spanish Second Chance Law, originally enacted as Act 25/2015, now contained in the consolidated Insolvency Act and deeply reformed by Act 16/2022 (transposing EU Directive 2019/1023 on restructuring frameworks), is the legal mechanism allowing individuals (private citizens and self-employed) in insolvency to obtain the discharge of unsatisfied liabilities (EPI), previously known as BEPI. Its objective is to articulate a fresh start for honest debtors caught in over-indebtedness without serious fault or fraud. Consolidated case-law from the 1st Chamber of the Supreme Court has delimited the contours of the benefit: good faith is presumed and compliance with legal requirements must be evidenced to trigger debt cancellation.

The procedure is articulated in several phases. First, the preliminary viability analysis: composition of liabilities, assets, identification of public credits (Tax Authority and Social Security) and private credits, and evaluation of any potentially excluding actions (socioeconomic offences, asset concealment, forgery). Second, the insolvency application to the court: since Act 16/2022 there is no longer any need to attempt an out-of-court payment agreement first, a mechanism that Act abolished. Third, the choice of route: discharge with liquidation of the estate or discharge with a payment plan, without prior liquidation, generally lasting 3 years and 5 in certain cases, such as when the habitual dwelling is not sold (Arts. 486 and 497 TRLC). Fourth, the application for discharge of unsatisfied liabilities and the court's decision on it.

The dischargeable debts reach, as a rule, all private debts: credit cards, personal loans, microcredits, supplier debts, personal guarantees underwritten by administrators in business operations and, partially, mortgage credits for the amount not covered by the security after enforcement. A key innovation of the 2022 reform is the partial discharge of public credits: up to EUR 10,000 per debtor before the Spanish Tax Authority and another EUR 10,000 before the Social Security Treasury, with the first EUR 5,000 of debt fully discharged and 50% of the debt above that figure, up to the EUR 10,000 maximum. Excluded from discharge are, among others, maintenance debts, civil liability arising from a criminal offence, non-contractual liability for death or personal injury, criminal fines and very serious administrative penalties, the costs of the discharge application itself, secured debts within the limit of the special privilege and wages for the last 60 days of work up to three times the minimum wage (Art. 489 TRLC).

The technical defence and application planning are built on several lines. First, good-faith certification (Art. 487 of the Insolvency Restatement): no final custodial sentence in the previous 10 years for crimes against property and the socio-economic order, document forgery, against the Tax Authority and Social Security or against workers' rights carrying a maximum penalty of 3 years or more, unless criminal liability has been extinguished and the pecuniary liabilities paid, and no culpable classification of the insolvency. Second, delineation of liabilities: identification of contingent credits, accrued interest, overdraft fees and abusive clauses susceptible to parallel civil challenge. Third, protection of the habitual dwelling via the 5-year payment plan when the property is necessary for the debtor and family. Fourth, coordination with accessory criminal liability: if the debtor has personally underwritten corporate operations or acted as a culpable insolvency administrator, the strategy must be articulated with the corresponding criminal defence.

In current forensic practice, we observe a strong increase in second-chance applications after the 2022 reform, especially among self-employed people affected by the health crisis, guarantors of failed business operations and consumers over-indebted by revolving credits declared usurious by case-law. At Alonso Sala, we tackle each file with cross-cutting commercial-criminal analysis: we conduct prior patrimonial audit, evaluate latent criminal contingencies (especially Arts. 257-261 CP on punishable insolvencies), articulate the application and defend the granting of the discharge against typical challenges by the Tax Authority and creditors. We treat each file as a comprehensive patrimonial reset operation, not as a mere insolvency formality.