Fresh start for debtors plus tax and labor relief

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1. Individuals who have liquidated all their assets in an insolvency proceeding can ask the court to discharge their remaining debts, if they are debtors acting in good faith. In some cases the discharge is automatic; in others it depends on a five-year payment plan.
2. The out-of-court payment agreement is made more flexible: it is extended to individuals without a business, a simplified notary procedure is created for them, and the agreement can be extended to secured creditors in certain cases.
3. The Code of Good Practices for mortgage debtors is expanded: the income limit for eligible families rises, debtors over 60 are added as a vulnerable group, and floor interest rate clauses are permanently removed for those entering the new threshold.
4. The suspension of evictions from primary homes of especially vulnerable groups, such as large families, households with children under three, or debtors over 60, is extended by four years.
5. Under personal income taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings., deductions for dependents with disabilities and for large families are extended to people receiving unemployment benefits or pensions, and to single-parent households with two children. Income from debt reductions and payments in kind in insolvency proceedings is also exempt.
6. Companies that hire on permanent contracts and create net employment will have the first 500 euros of each worker's monthly contribution base exempt from the employer's common-contingency Social Security contributions, for 24 months (12 more for companies with fewer than ten workers).
7. Self-employed workers without employees who hire an employee can have 100 percent of their self-employment contribution waived for up to 12 months when caring for children under 7 or for dependent family members or relatives with disabilities.
8. Individuals are exempt from paying court fees, among other new exemptions.

Who it affects

• Individuals with debts they cannot pay: They can use the fresh start mechanism and, if they meet the requirements, be released from part or all of their debts.
• Families struggling to pay the mortgage on their primary home: They can benefit from the expanded Code of Good Practices and from the eviction suspension if they are in a vulnerable situation.
• Companies hiring on permanent contracts: They pay lower Social Security contributions on the first 500 euros of the contribution base of each new permanent contract.
• Self-employed workers with family care burdens: They can have their self-employment contribution waived for up to 12 months if they hire an employee.
• People going to court: Individuals are exempt from paying court fees.

Words worth knowing

Concurso de acreedores

Spanish insolvency proceeding: a court process for when a person or company cannot pay its debts, in which their assets are distributed among creditors.

Exoneración del pasivo insatisfecho

Discharge of unpaid debts: release from debts that could not be paid after the debtor's assets were liquidated.

Quita

Debt reduction: the creditor forgives part of what is owed.

Dación en pago

Payment in kind: handing over an asset (for example, a home) to the creditor to settle the debt.

Cláusula suelo

Floor rate clause: a mortgage clause that keeps the monthly payment from falling even when interest rates drop.

income tax

The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries