Debt Relief Lawyer in Alicante: the Spanish Second Chance Law

01What the Spanish Second Chance Law is and who it is for

The Second Chance Law (Ley de Segunda Oportunidad) is the Spanish mechanism that allows an individual, a private person or a self-employed worker (autónomo), to have unpayable debts legally cancelled and start again. The technical name is exoneración del pasivo insatisfecho (discharge of unpaid liabilities), contained in the consolidated Insolvency Act (Texto Refundido de la Ley Concursal, articles 486 onwards) as reformed by Law 16/2022. A debt relief lawyer in Alicante checks whether you qualify, prepares the personal insolvency filing (concurso de acreedores) and defends the discharge against your creditors.

It is designed for real situations I see among foreign residents on the Costa Blanca: a British couple in Playa de San Juan whose UK income fell with the exchange rate while their Spanish loans stayed the same; a self-employed builder in El Campello whose main client stopped paying; someone still being chased for the shortfall after a repossession. They are people in good faith who need an orderly way out.

Which debts can be cancelled

• Personal loans, credit and revolving cards, micro-loans and consumer finance.
• Supplier debts, unpaid rent, invoices and guarantees that have been called in.
• The shortfall left after a repossessed property is sold.
• Debt with the tax office (Hacienda) and Social Security, up to €10,000 with each body, as explained below.

As a general rule, child maintenance, civil liability arising from a criminal offence, fines and public debt above the legal caps cannot be discharged. If your problem is a single unpaid invoice rather than insolvency, you may not need this procedure: my guide to a civil lawyer in Alicante explains how ordinary debts are claimed and defended.

02Requirements to qualify for the Second Chance Law in Alicante

Since the 2022 reform there is no compulsory out-of-court settlement attempt and no minimum debt. What matters:

• Being an individual: a private person, a self-employed worker or a professional. A shareholder or director who personally guaranteed company debt can also apply.
• Being insolvent, now or imminently: you cannot pay your debts regularly, or soon will not be able to.
• Being a debtor in good faith: the key concept. Good faith is presumed unless a ground for exclusion applies: a conviction for economic, property or tax offences in the previous ten years, a very serious tax or Social Security penalty, hiding information from the court, or a previous discharge in the last five years (two if through a payment plan).
• Cooperating with the court and the insolvency administrator: full documentation, no hidden assets or income, in Spain or abroad.

Situations that need careful review

Selling or gifting assets in the months before filing, tax debt from an inspection or having directed a company that is also insolvent do not block the discharge, but require careful preparation. For foreign residents, assets and income abroad must be declared: the court expects a clear picture of your worldwide position. A badly prepared insolvency can end with the discharge refused and the debts intact.

If a dismissal is the origin of your insolvency, my guide to an employment lawyer in Alicante may be useful: recovering what you are owed can change the whole strategy.

03Discharge with liquidation or with a payment plan: two routes

Law 16/2022 offers two routes, and choosing correctly between them is the most important decision in the procedure.

Discharge with liquidation of assets

This is the fast route. Any assets are sold to pay creditors as far as possible and the court discharges the rest. With no assets of value, the case is processed as a concurso sin masa (no-asset insolvency), a simplified procedure that can, as a rough guide, be resolved within a few months if no creditor asks for an insolvency administrator. It is the usual option for someone who rents and lives on a modest salary or pension.

Discharge with a payment plan

This route lets you keep your assets, often including your main home, in exchange for paying part of your income to creditors over 3 to 5 years under a plan approved by the judge. At the end, whatever remains unpaid is discharged. It suits people with a mortgaged home that is up to date or enough income to afford a reasonable monthly amount.

The choice is made with the figures in front of us. My blog article on the Second Chance Law in Alicante (in Spanish) compares worked examples of both routes.

04Tax debt, Social Security and your home: the most common questions

These are the questions almost every client asks at my office on calle Isabel La Católica.

Debt with Hacienda and Social Security

The 2022 reform allowed public debt to be discharged for the first time, with a cap: up to €10,000 with the tax office and another €10,000 with Social Security. The first €5,000 with each body is discharged in full and the remainder up to the cap at 50 per cent. Anything above is not cancelled and must be paid or deferred. For a self-employed person with high public debt an instalment agreement with the authorities should be considered first.

What happens to your main home

This is the number one concern, especially for people who put their savings into a house in Spain. Honestly, it depends on the route and the numbers. With a payment plan you can keep the house if you continue paying the mortgage and the plan is viable; the lender keeps its security and the other debts are restructured. With liquidation, if the property is worth more than the outstanding mortgage it will be sold; if it is not, it brings creditors nothing and there is room to argue it should be excluded, although the court decides case by case. If a repossession (ejecución hipotecaria) has already started, time is against you.

Guarantors

Guarantors are not released by your discharge: if a relative guaranteed your loan, the lender can pursue them, and this is a point I always examine before filing.

05How long it takes and what it costs in Alicante

Honest figures, though every court and every file is different.

Timing

• Preparation: roughly 2 to 6 weeks to gather documents, draft the application and file it at the commercial courts (juzgados de lo mercantil) in Alicante. Foreign documents may need a sworn translation.
• No-asset insolvency: with no assets and no opposition, the discharge can arrive within a few months of admission, depending on the workload of the court.
• Insolvency with liquidation: one to two years, depending on what has to be sold.
• Payment plan: 3 years as a general rule and up to 5 when the home is kept or in other cases provided for by law.

Cost

Lawyer and court agent (procurador) fees depend on complexity: number of creditors, assets, enforcement already under way and the route chosen. In my office I work with a written engagement letter (hoja de encargo) and a fixed quote before starting, with the option of paying in instalments. If your income is below the thresholds of Law 1/1996, you can apply for legal aid through the Alicante Bar (ICALI).

From the moment the insolvency is admitted, enforcement against your assets is suspended and interest stops accruing, an immediate relief. If you would like me to review your case, book an appointment or message me directly.

One honest note: my consultations are held in Spanish. If you need an interpreter, mention it when you write on WhatsApp and we will arrange it.

06Alternatives before insolvency: renegotiation, revolving cards and usury

The Second Chance Law is powerful, but not always the first option. As a debt relief lawyer in Alicante, I start by checking whether your problem has a less invasive solution.

Renegotiating with creditors

A payment holiday, a longer term or a negotiated write-off may be enough when the debt is manageable and the problem is temporary cash flow. Since 3 April 2025 Organic Law 1/2025 also requires an appropriate dispute resolution method to be attempted before suing in most civil matters. A creditor who knows that insolvency is a real alternative tends to listen.

Revolving cards and usurious interest

Many household insolvencies in Alicante start with revolving credit cards carrying very high interest rates. Spain's Usury Act of 1908 (Ley de Represión de la Usura) is still in force and the Supreme Court treats a rate as usurious when it is notably higher than the normal rate for that type of product. If the contract is declared void for usury, you only repay the capital you actually used and the lender must refund everything charged on top. Sometimes, after claiming against two or three cards, insolvency is no longer necessary. My article on claiming back revolving card interest (in Spanish) explains this in detail.

When you are the one owed money

If your insolvency comes from not being paid yourself, the order for payment procedure (procedimiento monitorio, articles 812 onwards of the Civil Procedure Act) is a quick route, as my article on debt recovery in Alicante (in Spanish) explains.

07Attachments and debtor blacklists: protecting yourself in the meantime

While the case is processed, creditors do not wait. Two situations cause the most anxiety.

Attachment of salary, bank accounts and assets

An attachment (embargo) requires an enforceable title: a judgment, a decree from an order for payment procedure, a notarised loan deed or an enforcement order from the authorities. If you receive a claim or a demand, do not leave it in a drawer just because it is in Spanish: deadlines to oppose are short and a well-founded opposition can halt the procedure or reduce the debt. Salary attachments follow the scale in article 607 of the Civil Procedure Act: the minimum wage is exempt and only a rising percentage of the excess can be seized, less if you have dependants. Declaring insolvency suspends individual enforcement, another reason not to delay.

Debtor blacklists

Being listed in a credit blacklist (fichero de morosos, such as ASNEF) closes doors: you are refused finance, a rental contract or even a phone line. For the listing to be lawful the debt must be certain, due and enforceable, not disputed, and the creditor must have demanded payment first. If not, you can demand removal and, in some cases, compensation. After the discharge, cancelled debts must also disappear from those files.

If you need to stop an attachment or leave a blacklist while we study your case, message me on WhatsApp with a photo of the document and I will tell you what to do.

08How I handle debt cases in my Alicante office

I have practised in Alicante since 2002 and, although family law is my main specialism, many debt cases begin there: a divorce that leaves one spouse with the mortgage and the loans, an inheritance with more debts than assets (see my guide to an inheritance lawyer in Alicante), a family business that fails. That broader view lets me see the whole problem.

My way of working is direct. At the first meeting I review your documents and tell you whether you qualify, which route suits you and what risks I see. I give you an engagement letter with the fees in writing, prepare the application in detail, because the creditor list makes the difference, and keep you informed on WhatsApp at every step.

I work with clients across Alicante, El Campello, Torrevieja and the whole province, including many foreign residents. See my other practice areas or practical guides if your situation involves several fronts.

How the Second Chance Law is processed, step by step

1. 1
   Consultation and viability check

   We review your debts, income, assets and any grounds for exclusion. I tell you whether you qualify and which route suits you.

2. 2
   Gathering the documents

   We collect contracts, statements, tax and Social Security debt certificates, payslips and deeds. A complete creditor list avoids problems later.

3. 3
   Filing the insolvency application

   I file the application at the commercial court in Alicante with the inventory, creditor list and report, asking for no-asset processing where appropriate.

4. 4
   Insolvency declaration order

   The court declares the insolvency. Attachments and enforcement are suspended and interest stops accruing. Creditors submit their claims.

5. 5
   Liquidation or payment plan

   Depending on the route, assets are sold or a 3 to 5 year payment plan is presented, which creditors may contest and the judge approves.

6. 6
   Application for discharge

   I apply for the discharge of unpaid liabilities. Creditors may oppose alleging bad faith and, if they do, I defend your position.

7. 7
   Discharge order

   The court grants the discharge, final under liquidation or provisional until the payment plan is completed. Cancelled debts can no longer be claimed.

Frequently asked questions