The Second Chance Law: new developments, benefits and judicial evolution

The Second Chance Law has become a key tool for individuals—self-employed or private citizens—who honestly cannot meet their debt obligations. Its purpose is to offer a real solution to insolvency, allowing them to start over without being burdened by debt for life.

Among its main benefits is the possibility of obtaining full or partial debt forgiveness, including—after the reform—a portion of public debt, something historically prohibited. This debt relief allows debtors to regain their financial stability, access credit, rent a home, or start a new business. In short, it offers a true "second chance," as is already the case in other European countries.

Furthermore, requirements such as the prior attempt at an out-of-court settlement have been eliminated, and procedures have been streamlined, which expedites the process of obtaining the benefit. The possibility of keeping one's primary residence is also included if the ability to repay the mortgage is demonstrated.

"The practical application of the law varies depending on the judicial criteria of each province."
However, the practical application of the law varies depending on the judicial criteria of each province. Thus, while in Barcelona or Madrid judges automatically apply the exoneration of up to €10,000 per public creditor, in other places like Valencia or Seville there are more restrictive interpretations. The Provincial Court of Santander has clarified that full payment of the public debt is not required in the direct procedure if it is not a privileged debt, which marks an important step forward.

Courts in Bilbao and Zaragoza have also relaxed the good faith requirement, understanding that small recent debts do not prevent forgiveness if there is no fraud or concealment. This trend points towards a more humane and rehabilitative interpretation.

Despite its advantages, the Second Chance Law is neither automatic nor universal. It requires demonstrating certain requirements, such as the absence of convictions for economic crimes or having acted in good faith. Therefore, it is essential to have specialized professional advice, as improper handling can lead to the denial of the benefit or the exclusion of significant debts.

In practice, lawyers experienced in this area not only guarantee compliance with legal requirements but also design the most appropriate strategy based on the debtor's profile and the criteria of the competent court.

In conclusion, the Second Chance Law represents a valuable tool for starting over, but its application continues to evolve thanks to judicial rulings that refine and give real substance to its provisions. Therefore, it is essential to approach it with legal rigor and professional support from the outset.