Debt Cancellation
in Spain, for foreigners
Spain’s Second Chance Law (Ley de Segunda Oportunidad) lets natural persons cancel unpayable debts (bank loans, credit cards, personal guarantees and part of their Spanish tax and Social Security debts, up to €10,000 discharged per creditor) through a court procedure that ends with a judicial discharge of unpaid liabilities (EPI).
English-speaking lawyers based in Las Palmas de Gran Canaria. Serving clients across Spain remotely.
YES
Foreigners can apply
4-9mo
Without assets
€999
Fee from (IGIC & procurador incl.)
In short
Spain’s Second Chance Law (now arts. 486 et seq. of the Insolvency Act, as amended by Law 16/2022) lets any natural person, including foreigners with NIE, cancel debts to banks and credit cards and part of their debts to the Spanish Tax Authority (AEAT) and Social Security (TGSS): for each of them, the first €5,000 in full and 50% of the rest, up to a maximum of €10,000 discharged. The procedure is filed before the Commercial Section (Sección de lo Mercantil) of the Tribunal de Instancia and results in a judicial discharge order (Exoneración del Pasivo Insatisfecho, EPI). Cost at ALY Abogados: from €999, up to €4,500 in especially complex cases, with IGIC (Canary Islands VAT) and the court representative (procurador) included. Typical timeline: 4-9 months. ALY Abogados handles the entire procedure remotely; you don’t need to travel to Spain.
When does this apply to you?
The Spanish Second Chance procedure may be the right tool for you if:
- Your centre of main interests is in Spain (for a private individual, presumed to be your habitual residence); tax residence alone is not the test.
- You have unpayable debts to Spanish banks, credit cards, the AEAT (Spanish Tax Authority) or TGSS (Social Security).
- You closed a Spanish business and ended up with personal liabilities, executed guarantees or commercial debts.
- You inherited Spanish debts and need to settle them legally.
- You are a digital nomad who became overcommitted on Spanish credit cards or loans.
- You have a Spanish mortgage in default and want to negotiate while protecting your situation.
The procedure step by step
- 1
Free consultation
Online assessment of your case. We confirm whether you meet the requirements and which debts are cancellable.
- 2
File preparation
We compile creditor list, debt evidence, asset inventory and proof of insolvency. Translated documents accepted.
- 3
Voluntary insolvency filing
We file the voluntary insolvency proceedings before the competent Commercial Section (Sección de lo Mercantil) of the Tribunal de Instancia. Once the court declares the insolvency (concurso), ongoing enforcement actions and bank account freezes are, as a rule, suspended (arts. 142 to 144 TRLC).
- 4
Judicial discharge (EPI)
Once the procedure concludes, the court issues the discharge order cancelling unpaid debts. You can request removal from Spanish credit blacklists (ASNEF/RAI) afterwards.
Frequently asked questions
Can a foreigner use the Second Chance Law in Spain?
Yes. Spain’s Second Chance Law (Ley de Segunda Oportunidad, now arts. 486 et seq. of the Insolvency Act as amended by Law 16/2022) applies to any natural person (Spanish citizen, EU resident or non-EU citizen) who is insolvent and acts in good faith. The procedure is filed with the Commercial Section (Sección de lo Mercantil) of the Tribunal de Instancia of the province where the debtor has the centre of their main interests (art. 45 TRLC; art. 87 LOPJ); for a private individual this is presumed to be their habitual residence. Legal residency is not required.
What debts can be cancelled?
Bank loans, credit cards (including revolving), part of your Spanish tax authority (AEAT) and Social Security (TGSS) debts (for each of them, the first €5,000 in full and 50% of the rest, up to a maximum of €10,000 discharged, and only in the first discharge; art. 489 TRLC), commercial debts, microloans, executed personal guarantees, and administrative fines other than those for very serious infringements. Not cancellable, among others: maintenance debts, criminal fines, penalties for very serious administrative infringements, civil liability arising from a criminal offence, debts secured by a mortgage or other collateral up to the value of that collateral, and the part of AEAT and TGSS debt left outstanding under that scale (art. 489.1 TRLC); surcharges and interest, ranked as subordinated claims, are discharged outside that cap (Supreme Court judgments 260/2026 and 264/2026 of 18 February 2026).
How long does the procedure take?
For debtors without assets to liquidate (no-mass procedure): 4-9 months from filing to discharge. For debtors with assets: 8-15 months including liquidation.
Do I lose my home if I file for the Second Chance procedure?
Not necessarily. If the mortgage on your habitual residence is up to date with payments, the bank cannot enforce it during the procedure. You can negotiate restructuring of the mortgage or maintain the original terms. In the liquidation route any property may be sold, including your home; to keep your habitual residence you can apply for a five-year payment plan without liquidation (arts. 486, 495 and 497.2 TRLC).
How much does the procedure cost?
At ALY Abogados the full procedure costs from €999, up to €4,500 in especially complex cases, with IGIC (Canary Islands VAT) and the court representative (procurador) included. You can pay in instalments from €99/month with no interest or surcharge, and the quote is always agreed in writing. There are no court fees: individuals are exempt (art. 4.2.a Law 10/2012). First consultation is always free.
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