Spain's Second Chance Law in 2026: requirements, which debts are cancelled and how to apply

"Second Chance Law" (Ley de Segunda Oportunidad) is the popular name for the discharge of unsatisfied liabilities (exoneración del pasivo insatisfecho): the legal mechanism whereby a judge declares that a natural person no longer has to pay debts that remain uncovered. It is not a separate statute, but articles 486 to 502 of the consolidated text of the Ley Concursal (the Spanish Insolvency Act), as amended by Ley 16/2022 (the 2022 Insolvency Reform Act), in force since 26 September 2022.

It is always requested within insolvency proceedings (concurso de acreedores). It is handled by the Commercial Section of the Court of First Instance (Sección de lo Mercantil del Tribunal de Instancia) in the capital of the province where you have your centre of main interests, which is where you habitually manage your economic affairs and does not always match your registered address. In provinces without that Section, it is handled by a judge of the Civil Section of the Court of First Instance in the provincial capital.

It is neither a payment deferral nor a debt write-down negotiated with banks: it is a court ruling. The judge grants it after verifying that the requirements are met, it does not cover every type of debt and it does not release anyone who acted as your guarantor.

A lawyer and a procurador (licensed court representative who files documents and receives notifications on your behalf) are mandatory. At Managora we provide both, a practising lawyer registered with the Madrid Bar Association (ICAM) and our own procurador, and they are included in our Second Chance Law service; you can see the updated price on the service page. Regarding official costs, the judicial tasa (official fee) is €0 for natural persons, publication of the notice in the BOE (Official State Gazette) and the Public Insolvency Register is free, and the fee schedule for the procurador is subject to statutory caps. We break this down in our guide on how much the Second Chance Law costs.

Any natural person, whether running a business or not, who is a debtor in good faith: salaried employees, pensioners, unemployed individuals, an autónomo (self-employed worker in Spain), and also anyone who closed their business or personally guaranteed their company's debts, because the law makes no distinction based on the origin of the debt. Companies cannot apply.

The prerequisite is insolvency: current, if you cannot regularly meet your payment obligations as they fall due, or imminent, if you foresee that you will be unable to do so within the next 3 months. Being heavily indebted whilst still able to pay is not enough. The law does not require a minimum debt amount, but you do need 2 or more creditors: if the final list shows only 1, the insolvency proceedings are closed without reaching a discharge.

What is no longer required. Ley 16/2022 abolished the out-of-court payment agreement that previously had to be attempted first, the threshold of having paid 25% of ordinary liabilities and the requirement not to have rejected a job offer in the preceding 4 years. The insolvent debtor goes straight to insolvency proceedings, and does not have to attempt an alternative dispute resolution process beforehand either: Ley Orgánica 1/2025 (the Judicial Efficiency Act) excludes insolvency matters.

An active autónomo who qualifies as a micro-enterprise (fewer than 10 employees on average in the previous year and annual turnover below €700,000 or liabilities below €350,000) must mandatorily use the special procedure for micro-enterprises, and requests the discharge after liquidation or if their continuation plan fails. Someone who has already ceased trading goes, according to majority legal doctrine, into ordinary insolvency proceedings, although the Supreme Court has not yet ruled on this point. We explain this in our guide to the Second Chance Law for the self-employed.

And it is unwise to wait: the law obliges you to file for insolvency within 2 months of becoming aware of your current insolvency, and a culpable insolvency bars you from obtaining a discharge, although if it was declared culpable solely for filing late, the judge may take the circumstances of the delay into account.

Good faith is not a subjective impression formed by the judge: it means not falling under any of the exclusion grounds in article 487.1, a closed list summarised in the table below. Having taken out loans does not by itself exclude you; what excludes you is a criminal conviction, a very serious administrative penalty, a culpable insolvency, failing to cooperate, or having incurred debts recklessly, negligently or by providing false information.

On 18 February 2026, the Plenary of the First Chamber of the Supreme Court (judgments 259/2026, 261/2026, 262/2026 and 263/2026, according to the official note from its Technical Office) established that good faith is the absence of those exclusion grounds; that the debtor bears the burden of providing the necessary information, including the origin of debts that were disproportionate to their income at the time; that the judge verifies this of their own motion even if no creditor objects; and that a very serious tax or Seguridad Social (Spain's national social security system) penalty excludes the debtor, whereas secondary liability (derivación de responsabilidad) only excludes the debtor if it is proven to arise from fraudulent conduct by the company director comparable to a very serious infringement.

In practice, the fact that nobody objects is no longer sufficient. The explanatory report (memoria) must explain, with supporting documents, why each major loan was taken out and why you became unable to pay it back: redundancy, illness, separation, or the closure of a business. Before filing anything, our lawyer reviews every ground and the origin of every debt with you, and if anything prevents the discharge we tell you before we start.

The law provides two routes: discharge with liquidation of assets, and discharge with a payment plan without liquidation. Within the first route lies the most frequent scenario, assetless insolvency (concurso sin masa): 85.4% of insolvency proceedings in the first quarter of 2026 and 83% in the second, according to the Association of Registrars.

An assetless insolvency occurs when you have no attachable assets, when selling them would cost disproportionately more than they are worth, when your unencumbered assets are worth less than the foreseeable cost of the proceedings, or when the charges against them exceed their market value. You do not choose it: the judge determines it based on the application and its supporting documents. The judge declares the insolvency without further orders and, if within 15 days creditors representing at least 5% of total liabilities do not request an insolvency practitioner (whom they would have to pay themselves), you request the discharge within the following 10 days.

Having a salary or a pension does not prevent this: any income that does not exceed the statutory minimum wage (€1,221 per month in 2026) is unattachable, just like non-luxury furniture and household goods, and does not form part of the insolvency estate.

In a liquidation, the insolvency practitioner sells whatever is not unattachable, including anything you acquire up until the conclusion of the insolvency proceedings, accepted inheritances included. The discharge is requested during the hearing period prior to the conclusion of the proceedings and is granted directly, without a provisional phase.

The payment plan allows you to keep your assets, typically your home, by making payments over 3 years, or 5 years if your primary residence is not sold or if the payments depend mainly on your income. It is requested before liquidation is ordered. There is no minimum percentage to pay back, but the plan must allocate to the dischargeable debt all income exceeding the unattachable threshold, reasonable new living or business obligations and non-dischargeable debt, and must give each creditor at least what they would receive in a liquidation. We explain how mortgages fit into this in our guide on your home and the Second Chance Law.

There is no official figure: neither the General Council of the Judiciary nor the Association of Registrars publishes the duration of personal insolvency proceedings, and the median of 59 days sometimes quoted for assetless insolvency refers to corporate entities. What does exist are statutory time limits; the actual time depends largely on the workload of the specific Commercial Section handling your case.

In an assetless insolvency, the statutory time limits follow one after another as shown in the table: a few days to declare the insolvency if the paperwork is complete, 15 days to call upon creditors, 10 days to request the discharge and 10 days for written submissions (alegaciones). If nobody objects, the judge grants the discharge, after verifying the requirements, in the same court order that concludes the insolvency. If someone objects, an incidente concursal (ancillary insolvency proceeding) is opened and the proceedings do not close until the ruling becomes final; any appeal goes to the Provincial Court (Audiencia Provincial), which must rule within 2 months of receiving the case file.

In a liquidation, the law sets no fixed duration: it depends on how long it takes to sell the assets. In a payment plan, final discharge arrives when the plan ends, 3 or 5 years after its approval. What is within your control is not delaying the start: the judge will only declare the insolvency if the documents prove that the legal prerequisites are met, which is why we gather everything before filing.

The general rule is that all unpaid debts are discharged: personal loans, credit cards, microloans, bank overdrafts, trade suppliers or utility bills. The exceptions form a closed list, summarised in the table, and the judge may only add others in exceptional cases to prevent the affected creditor from becoming insolvent themselves.

Public law debt is subject to a cap. The statute only mentions the Agencia Tributaria (AEAT, Spain's national tax agency, also known as Hacienda) and the Seguridad Social, but the Supreme Court (judgments 254/2026 and 260/2026, of 18 February) applies the cap separately to each public law creditor: Agencia Tributaria, General Treasury of the Seguridad Social, local council (ayuntamiento) and regional government (comunidad autónoma). For each one, the first €5,000 is discharged in full plus 50% of the remainder, up to €10,000 discharged, which is reached on a debt of €15,000. Surcharges, interest and penalties, which classify as subordinated debt, are discharged in full; very serious penalties, never. And this allowance only applies to your first discharge.

You must list every single debt: according to those same Supreme Court judgments, the discharge only covers the debts that the debtor listed and that are identified in the court order. A forgotten credit card remains enforceable. You can find the full breakdown in our guide on debts that cannot be cancelled and the cap for Hacienda and the Seguridad Social.

Protection begins when the court issues the order declaring insolvency, not when you file the application. From that court order onwards, no new enforcement actions or administrative enforcement proceedings, tax ones included, may be initiated against the assets of the insolvency estate, and those already underway are suspended. Labour enforcement actions and administrative enforcement proceedings where assets were seized before the declaration of insolvency may continue if the judge declares that the asset is not necessary for your business or professional activity, and the enforcement of real security interests (such as mortgages) follows its own specific rules.

Suspending is not cancelling: the judge can only lift seizures already in place if they severely hinder your professional or business activity, and never administrative ones. The debt is extinguished upon discharge, not before.

Once the discharge is granted, creditors of discharged debts cannot claim anything from you except to apply for revocation; creditors of non-dischargeable debts retain their rights of action. The discharge does not extend to sureties, guarantors, joint and several co-debtors, insurers or non-debtor mortgagors, although if the guarantor pays the creditor and then claims against you, that reimbursement claim is discharged just like the principal debt. Under an unliquidated community of property marriage regime (gananciales), the discharge of marital debts does not extend to your spouse unless they obtain their own discharge.

The court order granting discharge following liquidation, or granting final discharge under a payment plan, orders creditors to notify the credit default registers to which they reported you. You can also formally require each credit register to update its records by sending a certified copy of the court order: the register has 1 month to reply and, if it fails to do so, a complaint can be filed with the Spanish Data Protection Agency (AEPD). We handle this in our service for removing your details from credit default registers after discharge, and we explain it in our guide on ASNEF, Experian and CIRBE.

The drawbacks, plainly stated. Publicity: the declaration of insolvency is published in the BOE and in the Public Insolvency Register and is recorded in the Registro Civil (Spain's Civil Registry, which records births, marriages and legal status); under a payment plan, you also accept that the discharge will remain visible on the Public Insolvency Register for 5 years or the shorter duration of the plan. Revocation: for 3 years, any affected creditor may request revocation if it is proven that you concealed assets, rights or income, if your financial position improves substantially through an inheritance, bequest, gift or gambling, or if a final criminal conviction or administrative penalty is handed down in proceedings that were already underway.

Furthermore, it does not protect your guarantor; public debt is cancelled only up to a cap and only the first time; in a liquidation, assets that are not unattachable are sold, and a payment plan involves 3 or 5 years of making payments and reporting to the judge every 6 months, with the risk that a breach will trigger liquidation. And you cannot repeat it quickly: a subsequent discharge requires waiting 2 years from a final discharge under a payment plan, or 5 years from a discharge granted with liquidation.