Struggling with debt as a freelancer or individual in Spain? Discover how to apply for the second chance law and legally cancel your debts.
What Is the Second Chance Law in Spain?
The Second Chance Law is a legal mechanism that allows individuals and self-employed workers (autónomos) in Spain to cancel part or all of their personal debts if they are in a situation of insolvency and meet specific requirements.
Created under Royal Decree-Law 1/2015 and reformed in 2022, this law helps those who cannot meet their financial obligations rebuild their lives without the burden of unpayable debt.
Who Can Apply for the Second Chance Law in 2025?
To be eligible for the Second Chance Law, you must meet the following criteria:
- Be a natural person (individual or self-employed).
- Be insolvent, either currently or imminently, with no ability to pay your debts.
- Have acted in good faith throughout the process (e.g., no hidden assets).
- Not have been convicted of economic or tax crimes in the last 10 years.
- Not have used the law in the last 5 years (without a payment plan), or the last 2 years (with a payment plan).
How to Apply for the Second Chance Law: Step-by-Step
Evaluate Your Financial Situation
Start by gathering all relevant documentation: debts, assets, income, contracts, and tax obligations. This allows you to prove your insolvency before the court.
Example: If you’re self-employed with unpaid invoices, loans, and overdue taxes, gather those records to show financial hardship.
Contact a Specialist Lawyer or Gestoría
While not legally required, working with a lawyer or fiscal advisor who specialises in how to apply for the second chance law can make the process smoother and reduce the risk of rejection due to errors. At Entre Trámites, we offer expert assistance tailored to freelancers and small businesses.
File the Petition with the Court
Since the 2022 reform, you no longer need to try an out-of-court settlement first. You can apply directly to the Commercial Court (Juzgado de lo Mercantil) in your province via a “no-asset procedure” if you don’t have valuable assets.
Your application should include:
- Inventory of assets and rights
- List of creditors and debts
- Proof of insolvency
- Request for debt cancellation (with or without a payment plan)
Court Review and Start of Procedure
The court will review your documents to decide whether to initiate proceedings. If you have no assets, the no-asset process begins, potentially leading straight to debt cancellation.
If you do have assets or propose a payment plan, a standard bankruptcy process will begin.
Debt Cancellation (EPI – Exoneration of Unsatisfied Liabilities)
At the end of the process, if all conditions are met, the court may approve cancellation of your debts. This cancellation can be:
- With a payment plan: pay part of your debt over 3–5 years.
- Without a payment plan: if you have no income or assets to offer.
Which Debts Can Be Cancelled?
Most common debts can be discharged, including:
- Bank loans and credit card debt
- Supplier invoices and business-related liabilities
- Overdue rent or private loans
Since 2022, up to:
- €10,000 from the Tax Agency (Hacienda)
- €10,000 from Social Security
…can also be cancelled. Amounts exceeding these limits must be managed through a payment plan.
How Long Does the Process Take?
- No-asset procedures: 6–9 months
- With assets or payment plan: 12–18 months or longer, depending on complexity
FAQs About How to Apply for the Second Chance Law
Can I cancel debts with Hacienda or Social Security?
Yes, up to €10,000 each can be discharged. Remaining debt must be paid in instalments.
Will this affect my credit history?
Yes, your name will appear in credit default lists, but you can request removal once the cancellation is approved by the judge.
What if I don’t meet my payment plan?
Failure to comply can lead to the cancellation being revoked. Staying on track is essential to keep your discharge active.
Start Fresh and Leave Debt Behind
Knowing how to apply for the second chance law in Spain can be life-changing. With the right support, documentation, and legal approach, you can free yourself from overwhelming debt and start over — legally and securely.At Entre Trámites, we help autónomos and individuals through the process, from legal advice to document preparation and court filings. You can also contact us directly through this contact Form for us to call you, or if you prefer, you can schedule a free consultation or write to us on WhatsApp.
