The Second Chance Law (LSO), implemented in 2015 and reformed in 2022, offers a way out for individuals, including self-employed workers, facing economic difficulties. This regulation allows for total or partial exemption from debts for those who do not have enough assets or estate to meet their obligations, as long as good faith is demonstrated in the process.
Despite being in force for almost a decade, the lack of awareness about this law is alarming. A recent survey by Legálitas reveals that 63% of Spaniards are not aware of its existence. However, 30% of respondents say they have heard of the LSO, and 7% have chosen to use it to try to regularize their financial situation.
The Second Chance Law offers debtors two routes they can take. The first is the exoneration of unsatisfied liabilities, which can be carried out through the liquidation of assets or, if there are no realizable assets, without the need to liquidate. As a second option, a payment plan is established that must be approved by a judge and adapted to the debtor’s economic capacity.
To benefit from these options, the debtor must be in a situation of insolvency, meaning their debts must exceed their income to the point where they cannot meet their payments. It is also required that there are no economic criminal records and that the assets offered are free of charges, allowing for the liquidation of part or all of the debt.
The procedure to request the Second Chance Law includes the presentation of an initial written document signed by a lawyer and a procurator before the corresponding court. Due to the complexity of the process, Legálitas recommends that interested parties seek specialized advice to assess their situation and obtain the necessary guidance.
The growing concern among the population regarding debt management has led Legálitas to receive a constant number of consultations, with dozens of calls weekly from people seeking to clarify their options in the face of financial difficulties.
via: MiMub in Spanish
