Second Chance Law Spain 2026:
Cancel Your Debts Legally
Spain's insolvency law for individuals cancels by court resolution the debts the law allows to be discharged, including part of tax and Social Security debts (up to €10,000 discharged per creditor). Available to EU and non-EU residents with their centre of main interests in Spain.
6-18 months
Average process duration
€10,000
Max. discharge each for tax and Social Security debts
No cap
No maximum amount of debt (art. 486 TRLC)
All nationalities
Available to foreigners
Key facts about the law
Spain's Second Chance Law (now arts. 486 et seq. of the Insolvency Act, as amended by Law 16/2022) is modelled on the EU Insolvency Directive and follows principles similar to bankruptcy discharge in the UK and US.
6-18 months
Average process duration
€10,000
Max. discharge each for tax and Social Security debts
No cap
No maximum amount of debt (art. 486 TRLC)
All nationalities
Available to foreigners
Who qualifies?
All of the following conditions must be met to apply.
Natural person (not a company). Legal entities have separate insolvency procedures.
Genuine insolvency: unable to meet payment obligations as they fall due.
Good faith: no fraud, no criminal convictions for economic crimes in the last 10 years, no concealment of assets.
No previous discharge granted in the last 5 years (2 years if it was obtained through a payment plan; art. 488 TRLC).
Centre of main interests (COMI) in Spain. Nationality is irrelevant and legal residency is not required.
What debts are cancelled?
The 2022 reform significantly expanded the scope of cancellable debts, including partial discharge of tax and Social Security debts for the first time.
| Debt type | Cancellable? | Notes |
|---|---|---|
| Bank loans | None | |
| Credit cards | None | |
| Tax debts (AEAT) | Partially: up to €10,000 per public creditor, first discharge only (art. 489.1.5 TRLC) | |
| Social Security debts | Partially: same €10,000 cap, applied separately | |
| Mortgage residual debt | None | |
| Business debts (personal guarantees) | None | |
| Criminal fines and penalties for very serious administrative infringements | Art. 489.1.6 TRLC |
How the process works
Four stages from first consultation to judicial discharge.
Free consultation & viability analysis
We review your situation, calculate total debts, and confirm whether you meet all legal requirements before you commit to anything.
Documentation & insolvency petition
We gather all required documents (creditor list, income & asset statements) and file the insolvency petition before the court.
Court proceedings
In an ordinary insolvency the court appoints an insolvency administrator and calls on creditors to file their claims (art. 28 TRLC); in a no-asset insolvency (art. 37 bis TRLC) an administrator is appointed only if creditors holding at least 5% of the liabilities request it (arts. 37 ter and 37 quater TRLC). Instead of liquidation, the debtor may apply for discharge under a payment plan approved by the judge (arts. 495 to 498 TRLC).
EPI: judicial discharge order
The judge grants the discharge of unsatisfied liabilities (exoneración del pasivo insatisfecho, EPI), cancelling all qualifying debts by court order, at the close of the insolvency if assets are liquidated, or provisionally and then definitively at the end of a payment plan.
Can I apply if I'm not Spanish?
Yes. Spain's Second Chance Law follows the EU Insolvency Regulation (EC 1346/2000 and its 2015 recast), which determines jurisdiction by the debtor's Centre of Main Interests (COMI). If your COMI is in Spain, Spanish courts have jurisdiction, regardless of your nationality.
COMI is typically where you habitually reside and where most of your economic activity takes place. Factors courts look at: where you live, work, bank, pay taxes and have registered your main address. There is no minimum residency period required by law, though courts may scrutinise very recent moves.
We regularly represent British, German, Dutch, Latin American and other international clients in Second Chance Law proceedings in Gran Canaria and other Spanish jurisdictions. We handle cases in English from start to finish.
Foreign residents: what you need
NIE (Foreigner Identity Number)
Not a legal requirement of the insolvency, but in practice needed as identification and tax number
Spanish bank account
For insolvency proceedings
Empadronamiento (municipal registration)
Evidence of COMI
Foreign debt documentation
Translated if not in Spanish
Tax returns / AEAT registration
If you have Spanish tax obligations
Power of attorney
Required for us to act on your behalf
Frequently asked questions
Is Spain's Second Chance Law available to foreigners?
Yes, any person (EU or non-EU) with their centre of main interests (COMI) in Spain can apply. Nationality is irrelevant and the law does not require legal residency. COMI is typically determined by where you habitually reside, work and have your main financial ties.
How long does the process take?
6-18 months depending on the court and whether creditors dispute the discharge. Straightforward cases with no assets tend to resolve faster. Cases involving property or business assets may take longer.
Can I keep my home?
In some cases yes: you can apply for discharge under a payment plan without liquidation, which lasts five years when your main home is not sold (arts. 486.1, 495 and 497.2 TRLC). It does not require the bank’s agreement, but the mortgage is not discharged up to the value of the security and you must keep paying it (art. 489.1.8 TRLC). This requires careful planning from the start of the process.
What happens to my debts with the Spanish Tax Agency (AEAT)?
Since the 2022 reform (Law 16/2022), public debt is partially dischargeable under art. 489.1.5 TRLC: 100% of the first €5,000 and 50% of the remainder, up to a maximum of €10,000 discharged PER public creditor. The Supreme Court (Civil Chamber, judgments 260/2026 and 264/2026 of 18 February 2026, ECLI:ES:TS:2026:436 and ECLI:ES:TS:2026:440) held that the cap applies separately to each public creditor: the tax office (AEAT), Social Security and any regional, provincial or local authority; and that public claims ranked as subordinated, such as surcharges and interest (art. 281.1.3 TRLC), are discharged outside that cap. Before 2022, public debt was entirely excluded.
How much does it cost?
Initial consultation is free. Fees are agreed before starting any proceedings. At ALY Abogados the procedure costs from €999, up to €4,500 in especially complex cases, with IGIC (Canary Islands VAT) and the court representative (procurador) included, payable in instalments from €99/month with no interest or surcharge. We provide a detailed fee agreement in writing before you commit.
Keep reading
Página completa en español sobre la LSO: requisitos, proceso y casos de éxito.
Check in 4 questions whether you qualify for debt cancellation in Spain.
Your debts follow you abroad. Why filing before you move matters and how the EU six-month COMI rule works.
British cards and loans can be discharged in Spain, but recognition in the UK is no longer automatic.
Up to €10,000 per public creditor; surcharges and interest are discharged in full, outside that cap.
Free initial consultation. We speak English.
Find out in 30 minutes whether Spain's Second Chance Law can cancel your debts. We handle cases for international clients entirely in English.