If you are drowning in debt, we explain the Second Chance Law, which helps you get a fresh start.
The rise of the Euribor and the increase in prices have caused many families to resort to loans to pay their bills or to be unable to pay their debts. Therefore, from ASUFIN we explain what the Second Chance Law consists of, which can help you in case you are in a situation of over-indebtedness.
The Second Chance Law is a procedure that is carried out in court, by which individuals who suffer a moment of over-indebtedness can request the exoneration (the “forgiveness”) of their debts, in certain cases.
In other cases, they may request the orderly liquidation of their assets, with debt reductions and deferrals. These procedures are regulated in RD 1/2020 of May 5, which approves the revised text of the Insolvency Law.
How can ASUFIN help you with the Second Chance Law?
- Our lawyers, experts in second chance law, will advise you, will explain how to apply for the second chance law and will study the best way to alleviate your over-indebtedness situation.
- You will be able to take advantage of a mechanism that is proving its effectiveness to clean up your finances when you can no longer meet your payment commitments.
- Our objective is that you can start from scratch, even if you keep the property you own.
Depending on the amount and nature of your debts, as well as the situation of your assets, you will be able to achieve through a judicial procedure:
- The total exoneration of your debts with private creditors and partial exoneration of the public credit, with liquidation of the patrimony or not when there is no patrimony.
- Or a payment agreement, with reductions of the debts and deferrals of the same ones.
What happens with the habitual residence in case of insolvency?
In the new text of the Insolvency Law, there are two possible scenarios:
Liquidation of the assets of the insolvent party, with exoneration of the debts: this will happen when the debtor has no assets or the same has a value that makes it not worth liquidating or has assets, and the same is liquidated to meet the debts. In this scenario, the debtor’s house will be foreclosed if it is worth it, because the value of the property far exceeds the debt borne by the property itself. It is settled doctrine by our courts that when the realization of the property does not guarantee to the mortgagee the complete collection of the credit and when its sale cannot benefit the remaining creditors, it is not advisable to sell the property because it makes no sense to liquidate the property if with the sale of the property it will not be possible to satisfy the totality of the debt.
The requirements for the non-sale of the property will be:
- That the owner is up to date with the installments of the loan.
- That the owner is in conditions to continue paying the installments of the loan.
- That it is foreseeable that the sale will not cover the mortgage loan.
- That the value of the mortgage guarantee is higher than the reasonable value of the property.
Without liquidation of the insolvent debtor’s assets: by agreeing a payment plan with the creditors.
- In this case, the debtor’s home will NOT be foreclosed if the debtor has agreed to a payment plan.
- In this case, the Judge will decree the unseizability of the debtor’s habitual residence.