UK debts and Spain's Second Chance Law after Brexit

Can British residents in Spain use the Second Chance Law?

Spanish insolvency law does not ask for Spanish nationality: any debtor can be declared insolvent (art. 1.1 TRLC). The procedure is the concurso de acreedores, often called Spanish bankruptcy. The discharge of unpaid debts (exoneración del pasivo insatisfecho, EPI) is open to any individual acting in good faith, whether or not they run a business (art. 486 TRLC). Since the Ley 16/2022 reform, good faith means not falling into any of the exclusions in art. 487.1 TRLC, such as certain criminal convictions in the previous ten years, an insolvency classified as culpable, or reckless or negligent borrowing.

Whether a Spanish court can hear your case depends on where your centre of main interests (COMI) is (art. 45 TRLC; art. 3.1 of Regulation (EU) 2015/848). For a private individual it is presumed to be the place of habitual residence. Under EU case law, it is assessed on objective factors that creditors can see, in particular where you manage your finances, where you earn and spend most of your income and where most of your assets are. Having your only property in another Member State does not, on its own, rebut that presumption (case C-253/19, ECLI:EU:C:2020:585).

The presumption of habitual residence only applies if your habitual residence was not moved to another Member State in the six months before filing (for the self-employed, the presumption points to their main place of business and the period is three months). The text speaks of a move "to another Member State", and the firm has found no judgment on how it applies to someone who arrived from the UK.

The law does not require legal residence or a residence card. In practice you will need identification and a tax number (NIE), and the application must include your Spanish income tax returns for the last three years, including any that should have been filed (arts. 495.1 and 501.3 TRLC).

The case is heard by the Commercial Section of the Court of Instance (Sección de lo Mercantil del Tribunal de Instancia), which as a rule sits in the provincial capital, whether or not the debtor runs a business (art. 87.1 and 87.7 LOPJ). The application is signed by a lawyer and by a court representative called a procurador (art. 6.2 TRLC). Foreign nationality is no obstacle in practice: in STS 264/2026, of 18 February (ECLI:ES:TS:2026:440), the debtor, identified by an NIE, obtained a partial discharge.

Your UK creditors belong in the Spanish case

The application must list every creditor with their address (art. 7.3.º TRLC) and include an inventory of your assets stating where each one is (art. 7.2.º TRLC). The estate covers property and money outside Spain too (arts. 47.2 and 192 TRLC). Where an insolvency administrator is appointed, they must write individually to each known creditor based abroad (art. 738 TRLC).

Leaving out a UK creditor can cost you the discharge. The law excludes anyone who breaches the duty to cooperate with and inform the court, or gives false or misleading information (art. 487.1.5.º and 6.º TRLC), and the judge checks those exclusions even when no creditor objects (arts. 498.2 and 502.1 TRLC). Hiding assets or income in the UK also lets a creditor seek revocation of the discharge (art. 493 TRLC).

Debts owed to HMRC or to another country's social security system can be lodged in a Spanish case, subject to reciprocity, and rank as ordinary claims (art. 739.2 TRLC). No rule or judgment the firm has found says how they fit the Spanish cap on public debt explained below.

Can UK creditors chase you in Spain?

From the day the court declares the insolvency, creditors cannot start new enforcement against the assets in the estate, and that includes tax collection (art. 142 TRLC). Once the discharge is granted, creditors whose debts it extinguishes cannot take any action against you in Spain to collect them, except to ask for revocation (art. 490 TRLC).

A UK creditor that already holds a British judgment cannot enforce it here directly. It first needs a Spanish court to recognise it and declare it enforceable, the procedure Spanish law calls exequátur (art. 42 Ley 29/2015), subject to any EU rule or treaty that applies (art. 2 of the same law).

The two routes and the debts that survive

With liquidation, your non-exempt assets are sold, or the case closes because there is nothing to sell, and the discharge is granted when the case is closed (arts. 501 and 502 TRLC). With a payment plan, there is no liquidation and you pay according to your means for three years, or five years if your main home is not sold or the payments depend mainly on your income (arts. 495 to 497 TRLC).

Some debts survive either route (art. 489.1 TRLC). Among them are maintenance, civil liability arising from a crime, criminal fines and very serious administrative penalties, and secured debt up to the value of the security. Spanish public debt is discharged only in part: up to €10,000 of debt owed to the tax agency (AEAT), the first €5,000 in full and 50% of the rest up to that limit. Social Security debt has its own limit on the same terms, and only a first discharge can reach public debt (art. 489.1.5.º and 489.3 TRLC). The Supreme Court has held that the limit applies to each public creditor separately and that subordinated public claims, such as surcharges and interest, are discharged in full without using it up: STS 260/2026, of 18 February (ECLI:ES:TS:2026:436).

If a relative in the UK guaranteed one of your loans, the discharge does not protect them: the creditor keeps its rights against guarantors (art. 492.1 TRLC).

Is a Spanish discharge recognised in the UK after Brexit?

The Withdrawal Agreement kept the EU Insolvency Regulation only where "the main proceedings were opened before the end of the transition period" (art. 67.3.c). That period ended on 31 December 2020, as the Court of Justice confirmed in case C-723/20, Galapagos BidCo (ECLI:EU:C:2022:209, para. 39).

For a case opened in Spain today, the UK is a third country. Inside the EU, except Denmark, the Spanish opening decision and the decisions on the conduct and closure of the case are recognised without further formality (arts. 19.1, 20.1 and 32.1 of the Regulation), subject to public policy (art. 33) and to exceptions such as security over assets in another Member State (art. 8). In the UK, recognition requires an application to a UK court under its own rules: the Cross-Border Insolvency Regulations 2006 in England, Wales and Scotland, and the Cross-Border Insolvency Regulations (Northern Ireland) 2007 in Northern Ireland.

Debts with Irish lenders follow the EU rules: Ireland applies the Regulation. Spanish law also provides for countries that do not recognise a Spanish insolvency: if your assets are in one, the judge may authorise creditors to enforce against them there individually (art. 741.2 TRLC).

English-law debts: why the UK side needs its own advice

In Spain the position is set by Spanish law: once the discharge is granted, creditors whose debts it extinguishes cannot take any action here to collect them (art. 490 TRLC), and the list of debts that survive (art. 489.1 TRLC) does not refer to the law of the contract.

What happens in the UK is a different question, governed by British law, on which the firm does not advise. If a UK credit card, personal loan or overdraft is governed by the law of England and Wales, whether that debt could still be enforced in the UK after a Spanish discharge, and whether it makes a difference that the UK lender lodged a claim in your Spanish case, are questions for a UK insolvency adviser. Check the governing law clause of each agreement and take that advice before you rely on the discharge in the UK. Do not assume your UK debts disappear in the UK because a Spanish court discharged them.

Planning to move back? See our guide to leaving Spain with debts.

Filing in Spain or in the UK: where your income and assets are

Illustrative example, not a real case. A British couple employed in Lanzarote have a personal loan with a Spanish bank, two UK credit cards and a UK overdraft governed by English law. Their salaries go into a Spanish account, they own nothing in the UK and do not plan to go back. If they met the good faith requirements, a Spanish discharge would cover all those debts in Spain, and the UK lenders could not collect here (art. 490 TRLC). Whether the English-law debts could still be enforced in the UK, for example if the couple later moved back or acquired assets there, is a question of British law.

Now suppose one of them still owns a flat in England or has a salary or pension paid into a UK account. UK creditors may try to enforce against what is there, and the effect of the Spanish case on a mortgage over that flat is governed by English law, the law of the place where it is (art. 723 TRLC). Get UK advice before filing in Spain.

An individual voluntary arrangement (IVA), a debt relief order (DRO) and bankruptcy in England and Wales each have their own conditions on residence and links with the UK, which a UK adviser can check. A UK procedure would not be recognised in Spain automatically either: Spanish law requires exequátur for foreign insolvency proceedings from outside the EU (art. 742.1 TRLC). The firm advises on the Spanish side and can work alongside your UK adviser.

Language and UK documents

The case is conducted in Spanish. If you do not understand Spanish and have to give evidence or be told of a decision in person, the court can appoint an interpreter (art. 143.1 LEC; art. 231.5 LOPJ). Documents in English must come with a translation, which may be a private one; if another party challenges it within five days, the court orders an official translation at the cost of whoever filed the document (art. 144 LEC). UK public documents, such as a marriage certificate supporting the family details in your application (art. 7.1.º TRLC), need an apostille or legalisation (art. 323.2 LEC).

Cost and how to start

The firm charges €999 for cases without special complexity and up to €4,500 for complex ones, such as cases with many creditors, property or large debts to public bodies. IGIC (the Canary Islands indirect tax) and the procurador are included, and the fee is agreed in writing before work starts. The details are on the fees page, and the procedure step by step is on the Second Chance Law page.

To have your UK and Spanish debts reviewed together, request an appointment. The firm is based in Las Palmas de Gran Canaria and works by video call across Spain.