Spanish insolvency law has become a popular option for debtors in Europe. With the reform of the insolvency law in 2022, Spain offers a fast and efficient procedure for debt relief.
Those who relocate their main residence to Spain can benefit from a short procedure duration, immediate debt discharge, and low costs. Here, you will find out how the Spanish insolvency procedure works, what advantages and challenges it presents, and how Global Tax Saving can assist you.
Content
- What makes a Spanish personal bankruptcy procedure so special?
- Advantages and challenges of Spanish personal insolvency
- Requirements for filing personal bankruptcy in Spain
- With Global Tax Saving to personal insolvency in Spain
What makes a Spanish personal bankruptcy procedure so special?
The Spanish insolvency procedure for individuals is often referred to as the “Second Chance Law”. It was designed to enable debtors in financial distress to make a quick fresh start – without the long waiting periods typically seen in other countries.
Immediate debt discharge in the absence of assets
A major advantage of the Spanish insolvency procedure is that if the debtor has no assets, they receive an immediate debt discharge. This means that debts are simply cleared after the procedure.
There is no lengthy good conduct period as in countries like in the UK or the Netherlands. The court thoroughly examines the debtor’s financial situation to determine if any deliberate transfer of assets has taken place. In exceptional cases, creditors may raise objections that could delay the process.
Debts arising from criminal offences
Debts arising from criminal offences can be discharged under certain circumstances, although Spanish insolvency law is restrictive in this area. Each case is assessed individually, and in instances of serious offences, debt discharge is usually denied.
Low costs
The procedure in Spain is also financially appealing. The costs of the procedure typically amount to less than 500 Euro – significantly less than in many other countries.
Protection of the family home
Under certain circumstances, Spanish courts can protect the debtor’s family home from being liquidated. The home can be safeguarded if it is deemed essential for the daily life of the debtor and their family, although there is no guarantee.
Advantages and challenges of Spanish personal insolvency
Spanish personal insolvency comes with clear advantages. It is fast, affordable, and offers comprehensive debt relief. However, there are also some challenges that debtors should be aware of. For a smooth process, it is advisable to use the full-service offering of an experienced provider who can support you professionally at every step of your insolvency procedure.
Advantages
- Short procedure duration:
Spanish personal insolvency takes approximately twelve months. This is much faster than the three years typically required in other countries. - No good conduct period:
In Spain, there is no good conduct period, which speeds up the debt relief process. Debtors can start afresh more quickly. - Second chance law:
The law initially allows for an out-of-court settlement with creditors. If this is unsuccessful, the court can grant a full discharge of debts.
Challenges
- No new debts for five years:
Debtors are not allowed to take on new debts for five years. Otherwise, the old debts could be reinstated if creditors request it. - Proof of main residence in Spain:
To prevent bankruptcy tourism, Spanish courts require proof that the debtor has lived in Spain for at least three months prior to filing the application. - Criminal consequences for self-caused insolvency:
If the court determines that the debtor caused their insolvency through their own actions, criminal consequences may follow. Debt discharge can also be denied in such cases. - Maintenance obligations remain:
Maintenance obligations are not covered by the debt discharge in Spain and must continue to be paid. - Certification and translation of documents:
Debtors from other countries who wish to have the debt discharge recognised in their country of origin must have the Spanish documents certified and translated.
Requirements for filing personal bankruptcy in Spain
To file for personal bankruptcy in Spain as a non-citizen, certain requirements must be met.
Main Residence in Spain
Debtors must move their main residence (Centre of Main Interest) to Spain. They must be able to prove that they have lived in Spain for at least three months prior to filing the application. Spanish courts thoroughly review this.
Insolvency
Debtors must demonstrate their insolvency. The court will assess whether a genuine financial hardship exists.
No other ongoing insolvency procedure
There must be no other ongoing insolvency procedure in any other EU country. Double proceedings are not permitted and would invalidate the application.
Various documents are required to apply for personal bankruptcy in Spain, such as an overview of all debts, proof of income and assets, as well as evidence of residence in Spain.
With Global Tax Saving to personal insolvency in Spain
The path to personal insolvency in Spain can be complicated. For debtors unfamiliar with the Spanish legal system, professional support is highly recommended. Global Tax Saving guides you through the entire process, ensuring a smooth procedure without obstacles.
How Global Tax Saving Supports You:
- Advice and assessment of requirements:
We analyse your situation and check if you meet all the requirements for personal bankruptcy in Spain. - Preparation of documents:
We assist you with the preparation and translation of the necessary documents and ensure that you can provide proof of your main residence and insolvency. - Guidance through the procedure:
From filing the application to debt discharge, we are by your side and handle communication with the court and the insolvency administrator. - Recognition of debt discharge in country of origin:
After the procedure is completed, we take care of the certification and translation of the Spanish documents so that the debt discharge is recognised in the country of origin.
An experienced partner like Global Tax Saving is essential for cross-border insolvency. Our experts guide you safely through the process and help you overcome all challenges.
Contact us now for your non-binding consultation.
