Insolvent people currently have a legal framework which in some cases can allow them to have a second opportunity , without having to endure for life with the burden of their debts.

The first step that should be carried out in most cases is to try an Out-of-court Payment Agreement with the creditors, for which the debtor must initiate a procedure in which a bankruptcy mediator will be appointed.

The bankruptcy Ombudsman will be in charge of collecting the basic documentation of the debtor and carrying out the procedures with the creditors to see if it is possible to make a proposal for payment of the debt that complies with the limits established by law and has the agreement of the creditors. . This proposal will already include debt cancellations and payment deferrals and even the possibility of giving assets to the creditors in payment of the debt is admitted.

In addition, if the debtor is a natural person not an entrepreneur, the request for initiation of the procedure and the notarial or registration procedures for the appointment of the insolvency mediator, will not entail any cost.

If the settlement of payments with creditors-what is usual that the individual will go to creditors Contest is not reached, establishing the possibility that the debtor to repay debts that can not cope with the asset will exonerate you have.

In the bankruptcy proceeding, all the assets of the debtor will be liquidated and with this the debtors will be paid as far as it is reached, but the remaining debt will be exonerated if the Extrajudicial Payment Agreement was tried before and the insolvency credits could be made privileged and the credits against the mass and even without paying the same, if a Payments Plan is approved to 5 years.

With Payment Plan 5 years initially not exonerate credits under public law, food and special privilege (mortgages, pledges, ..) are those who should try to pay for the next 5 years, but if fulfilled the 5 years have not been able to pay in full the court may also exempt these credits if at least 50% of the share of non seizable income obtained in that period were to be used to pay them.

Even a court, although the legislation does not provide for it explicitly, is allowing the residence to keep debtor itself was paying monthly installments, agreeing a major remove the remaining debts included in the competition. Thus the individual not only benefits from the acquittals of the competition but can not lose your home if you can meet the monthly mortgage payments.

Although the current system is much improved, we understand this is a framework that can be used by many individuals to have a second chance and not be burdened all his life for an inability to cope with debts product business projects that did not go well, personally guarantees granted or personal projects initiated with a particular personal economic reality that the crisis has drastically disrupted.

We highly desirable that individuals who are in that situation discuss your case with a professional, since the advantages of being in one of the cases of exemption from debt and get a second opportunity real, is certainly more than considerable and can allow a future not have an indefinite embargoed from their payrolls or bank accounts.

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Marcos Jimenez, dig advocats

Marcos Jimenez de Parga

DiG Lawyers