Debt Discharge / Fresh Start (BEPI)

Debt Discharge in Spanish Law: the BEPI

The BEPI (Beneficio de Exoneración del Pasivo Insatisfecho) is the core of Spain’s second-chance regime for individuals. It allows a natural person who has undergone insolvency proceedings and liquidated all available assets to obtain court-ordered cancellation of remaining debts — releasing the person from the unlimited personal liability rule of Article 1911 of the Civil Code, which would otherwise make them indefinitely responsible for unpaid debts.

The BEPI was introduced by Act 25/2015 and substantially improved by Act 16/2022, which transposed EU Directive 2019/1023 on preventive restructuring frameworks.

Two Routes to Discharge

Route 1 — BEPI after Liquidation The debtor applies for discharge once the liquidation phase of the insolvency is concluded. To qualify, the debtor must have satisfied all claims against the estate (créditos contra la masa) and all specially privileged claims, or must have previously attempted an out-of-court payment arrangement (acuerdo extrajudicial de pagos) before filing for insolvency. The discharge covers ordinary and subordinated creditors’ remaining claims.

Route 2 — BEPI with Payment Plan Debtors who cannot meet the Route 1 thresholds may propose a payment plan of up to 3 years (extendable to 5 in justified cases) to partially satisfy claims not directly discharged (primarily general privileged creditors). Upon completing the payment plan, the court discharges the remaining balance.

2022 Reform: Extended Public Debt Discharge

Before 2022, tax and social security debts were entirely excluded from the BEPI — a major barrier since public debt is often the largest component of an individual entrepreneur’s liability. The reform introduced partial discharge of public debts:

• First EUR 10,000 per public creditor (Tax Authority, Social Security) is discharged.
• Maximum EUR 20,000 in total public debt discharged.
• The balance above these thresholds may be included in a negotiated payment plan with each public creditor.

Revocation

The discharge may be revoked within 5 years if: the debtor did not meet the good-faith requirements; assets or income were concealed; or the debtor’s financial situation substantially improves (in the payment plan route, improved income must be reflected in increased payments proportionately).

Availability in Microenterprise Proceedings

The BEPI is also available through the simplified microenterprise procedure (for businesses with fewer than 10 employees and liabilities below EUR 700,000), where the process is faster and less costly than in ordinary insolvency. This has made the fresh-start mechanism genuinely accessible to the smallest operators in the Spanish economy.