Bill proposes a fresh start for indebted families and self-employed

Automatic summary, not yet reviewed

1. The bill would add a special, simplified insolvency procedure to the Insolvency Law so that individuals, in their family economy or as self-employed workers, can settle their debts in an orderly way and get a second chance.
2. It would apply to people who cannot pay their debts due to current or imminent insolvency, as long as their debts are under three million euros, and only once.
3. Before the insolvency proceeding, if the primary home is at stake, mediation would be mandatory to seek agreements that allow keeping it. If the home is not affected, the debtor could negotiate a payment plan with creditors.
4. The restructuring plan could include debt reductions of more than half, payment deferrals of up to three years, full or partial debt forgiveness, and could even affect debts owed to the Tax Agency and Social Security.
5. During the negotiation and the proceeding, no enforcement actions or collection measures could be started or continued against the primary home or the rest of the debtor's assets.
6. If there is no agreement, a liquidation phase would open. The debtor could propose a payment plan of up to three years; if it is met, the judge would close the proceeding and forgive the remaining debt, as long as the debtor acted in good faith.

Who it affects

• Individuals over-indebted through their family economy, for example by the mortgage or rent on their primary home.: They could use the special procedure to settle their debts, once only.
• Self-employed workers with failed professional or business activities.: They would have a simplified procedure to restructure or settle their debts.
• Creditors, including the Tax Agency and Social Security.: They could accept debt reductions and deferrals of up to three years under the restructuring plan.
• People already insolvent due to debts from before the law.: For one year after it takes effect, they could request the procedure once.

Words worth knowing

Concurso (insolvency proceeding)

A court process that organizes the debts of someone who cannot pay, to reach agreements with creditors or liquidate their assets.

Quita (debt reduction)

Forgiveness of part of the debt: the creditor agrees to receive less than what is owed.

Espera (payment deferral)

Postponement of a debt payment to a future date.

Mediación (mediation)

A way to reach an agreement with the help of a neutral person (the mediator), without a judge deciding.

Pasivo (liabilities)

The total debts a person owes.

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