Bill to help people who cannot pay their debts

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1. The bill would create an out-of-court procedure, before a notary, so that an individual overindebted for reasons beyond their control can negotiate a payment agreement with creditors before going to court.
2. Overindebtedness would mean current or imminent insolvency, using more than 50% of household income to pay debts, or having lost one's home through foreclosure while still owing the mortgage holder. Objective causes would include unemployment, precarious work, disability, and separation, divorce or the death of a spouse.
3. The debtor would file a request with a notary listing income, expenses, assets and creditors. The notary would review the case, notify creditors and, if the case proceeds, prepare a financial recovery plan with payment proposals. The agreement must be authorized within three months at most.
4. Once the procedure starts, lawsuits and enforcement actions against the debtor's assets and guarantors would be suspended, and the debtor could not take on new credit without the notary's approval. The agreement would bind creditors if those representing more than 50% of the debt join, and could include debt forgiveness, payment deferrals and interest reductions.
5. If the agreement fails, the case would go to court. A judge could impose a payment plan with installments, interest reductions, suspension of guarantees and debt forgiveness, and even release the debtor from unpaid debt three to five years later, with the release revocable in cases of bad faith.
6. To make access cheaper, the bill would waive court fees, cut notary fees by 50%, and require credit institutions in which the FROBFROB Fondo de Reestructuración Ordenada Bancaria, a public fund that holds stakes in credit institutions. holds a stake to negotiate and join the notarial agreement.

Who it affects

• Individual consumers and self-employed people with debts caused by events beyond their control, such as unemployment or divorce.: They could renegotiate their debts before a notary and, if that fails, use a court procedure with payment relief.
• Creditors, including banks and credit institutions.: They would have to negotiate, with enforcement suspended and possible debt forgiveness.
• Guarantors and cosigners.: The suspension would also apply to them, but only regarding their primary home.
• Credit institutions with FROB participation.: They would be required to negotiate and join the notarial agreement.

Words worth knowing

Sobreendeudamiento (overindebtedness)

Current or imminent insolvency, or using more than half of household income to pay debts.

Convenio (agreement)

An agreement between the debtor and creditors on how debts will be paid.

Concurso de acreedores (creditors' insolvency proceeding)

A court procedure to distribute the assets of someone who cannot pay their debts among all creditors.

Garantía real (secured guarantee)

An asset, such as a home, pledged to secure a debt that can be seized if the debt is not paid.

FROB

Fondo de Reestructuración Ordenada Bancaria, a public fund that holds stakes in credit institutions.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries