Fresh Start Law in Spain (Segunda Oportunidad)

What Is Spain’s Fresh Start Law?

Spain’s ley de segunda oportunidad is a legal mechanism that allows natural persons (individuals and self-employed workers — autónomos) who cannot pay their debts to obtain a court-granted discharge of remaining unsatisfied debts after a formal insolvency process. The technical term for this discharge is BEPI: Beneficio de Exoneración del Pasivo Insatisfecho.

The concept addresses a fundamental problem in debtor rehabilitation: if all debts survive insolvency, a debtor has no incentive to work and earn, as any earnings will be seized immediately by creditors. A genuine fresh start — with a defined “clean slate” — encourages economic reintegration and reduces long-term dependence on social support.

Legislative History

• Ley 14/2013 (Entrepreneurs Law): First introduced a limited discharge mechanism for self-employed persons.
• Ley 25/2015 (Segunda Oportunidad Law): Extended and formalised the mechanism, introduced the BEPI, but with significant limitations that made it difficult to access.
• Ley 16/2022 (Insolvency Reform): Major overhaul transposing EU Directive 2019/1023. Substantially expanded access, introduced two alternative routes, simplified procedure, and extended coverage.

Who Can Access BEPI?

The mechanism is available to natural persons (personas físicas) — both private individuals (consumidores) and self-employed workers (autónomos). It is not available to companies (legal entities follow separate insolvency procedures).

Requirements

To qualify, the debtor must:

1. Be in a state of insolvency (insolvencia actual o inminente) — unable to pay debts as they fall due or where this is reasonably foreseeable
2. Act in good faith (buena fe) — no fraudulent conveyance, no false declarations of assets, no unjustified wealth dissipation in the 5 years prior to the application
3. Not have been convicted of certain crimes (patrimonial offences, economic crimes, labour crimes, insolvency crimes) in the prior 10 years
4. Not have obtained a BEPI in the prior 10 years

Good faith does not require the debtor to have been commercially successful — it requires honesty and transparency in the proceedings, and the absence of intentional fraud.

The Two Routes to BEPI

Route 1: Immediate BEPI with Payment Plan (Plan de Pagos)

The debtor proposes a 5-year payment plan (plan de pagos) for the satisfaction of debts that cannot be discharged (primarily public debts — tax and Social Security). If the plan is accepted, the debtor receives:

• Immediate discharge (exoneración provisional) of all dischargeable debts
• Obligation to comply with the payment plan for 5 years
• At year 5, if the plan has been complied with, the discharge becomes definitive

During the 5-year plan period, if the debtor’s financial situation improves materially, they must use part of the improvement to pay creditors (beyond what the plan specifies).

Route 2: Immediate Full BEPI for “Zero-Asset” Debtors

Where the debtor has no assets, no income, and no realistic prospect of payment capacity within 3 years, the court may grant an immediate full BEPI without a payment plan. This route is available where:

• The debtor has no viable assets to liquidate
• There is no income, or income does not exceed 1.5× the SMI (plus increments per dependent child/family member)

If the debtor’s financial situation improves materially within 3 years, creditors may request revocation of the BEPI and establishment of a payment plan.

What Debts Are Discharged?

Dischargeable

In principle, all debts are dischargeable through BEPI, including:

• Bank loans, mortgages, personal loans
• Credit card and consumer debts
• Business debts from commercial operations
• Debts to suppliers and service providers
• Debts from personal guarantees on company obligations

Not Dischargeable (Excluded Debts)

The 2022 reform significantly narrowed the excluded categories compared to the original 2015 law. Debts that are not discharged include:

• Public debts (tax and Social Security) above the mínimo no exonerable threshold (up to EUR 1,000 for taxes, EUR 1,000 for Social Security can be discharged; the excess must be paid via the payment plan)
• Alimony and child support obligations
• Debts arising from criminal liability of the debtor
• Debts for tort liability for death or bodily harm caused by gross negligence

The 2022 reform is notable for making public debts (taxes, Social Security) partially dischargeable — a significant improvement over the pre-2022 system, where all public debts were excluded, making fresh start practically inaccessible for most self-employed debtors who owed Social Security arrears.

The Insolvency Process

BEPI is only available within a formal insolvency process (concurso de acreedores). The process for individuals and autónomos follows a simplified track (concurso de acreedores especial) since the 2022 reform.

Special Simplified Track for Individuals

1. Application: Filed before the Juzgado de lo Mercantil (commercial court) in the debtor’s place of habitual residence
2. Appointment of insolvency administrator (administrador concursal): Reviews assets, verifies debt list, manages liquidation
3. Asset liquidation: All realisable assets are liquidated (with protection for essential assets — main residence has conditional protection, basic tools of trade, minimum income to meet vital needs)
4. Payment of preferred creditors: Secured creditors paid from proceeds; remaining debts assessed
5. BEPI application: The debtor applies for BEPI after asset liquidation
6. Court resolution: The court grants provisional or definitive BEPI or rejects the application

Protection of the Main Residence

One of the most debated aspects of the pre-2022 system was the frequent loss of the family home in insolvency. The 2022 reform introduced a residential moratorium mechanism: debtors may negotiate with the mortgage lender to restructure the mortgage over a period of up to 5 years as part of the insolvency plan, preserving the home. If the restructuring fails, liquidation of the home remains a possibility but is a last resort.

Revocation of BEPI

BEPI may be revoked if, within 5 years (Route 1) or 3 years (Route 2):

• The court discovers the debtor acted in bad faith (concealed assets, provided false information)
• The debtor materially improves their financial situation and fails to notify the court as required
• The debtor violates the payment plan (Route 1)

Frequently Asked Questions

Can an autónomo access BEPI while keeping their business running? Possibly. If the autónomo continues trading and the insolvency is filed as a going concern (not liquidation), it may be possible to restructure debts and continue the business. However, in practice, many autónomo second-chance cases involve liquidation of the activity and a fresh start in employment or a new venture.

Can a private individual (not self-employed) access fresh start? Yes. Since the 2022 reform, private consumers with unsustainable personal debt (mortgages, personal loans, credit cards) can access the same BEPI mechanism. This was a significant change — the pre-2022 system was heavily oriented toward self-employed debtors.

Does BEPI apply to mortgages on the main residence? The mortgage itself is not discharged through BEPI as long as the home is retained and mortgage restructuring is in place. If the home is liquidated, the remaining mortgage shortfall after the sale proceeds may be discharged through BEPI.

What is the impact on credit record (CIRBE, ASNEF)? Going through insolvency is registered in the public insolvency register (Registro Público Concursal) and credit information systems. The BEPI grant removes the legal obligation to pay, but the credit record history remains for the statutory retention periods. Rebuilding credit after BEPI typically takes several years.

How long does the process take? Under the 2022 reform’s simplified track for individuals and autónomos, the process is intended to complete within approximately 6 months where assets are straightforward. Complex cases with contested debts or ongoing litigation take longer.