First, the outbreak of the pandemic and then all the consequences it brought in economic matters, from ERTE to restrictions affecting many sectors. And all of this has been an exorbitant rise in energy prices and raw materials, which has also started to be reflected in the shopping cart, last year and at the beginning of that. The result was no other Increasing indebtedness of both self-employed and individualsBy multiplying the applications to take advantage of the Second Chance Act by five, this is the state of Alicante in 2021. 4,350 requests compared to just over 900 in the previous year.
The Second Chance Act is a mechanism that came into effect in 2015 with the idea of solving economic problems that small businesses, freelancers or individuals may run into, first and foremost. In particular, the aim is to make payments more flexible for those in near-insolvency, either through out-of-court settlements or, where appropriate, through a provision that specifies the terms and amounts that can be undertaken. All these, yes, if those affected show that they acted in good faith, debt does not exceed 5 million euros or those attempting a prior agreement for the payment of the amount due in installments.
In the first years, the demands to benefit from this law have been quite exemplary due to the lack of knowledge of the legislation and the better economic conjuncture. However, with the outbreak of the covid crisis and above all cost increases and runaway inflationIn the state of Alicante, demands skyrocketed, fivefold.
Ana Isabel García, member of the law firm Repara tu Deuda, which specializes in such cases, effectively explains that “the law was created to prevent the conviction of people who have been trapped in a debt for 20 or 30 years.” He can get both back. For example, we’re talking about self-employed people who had to close their businesses because of debts, and yet,Banks continue to demand money“.
He explains that the number of applications has been increasing rapidly recently due to the depletion of both family and business economies, “after two years with multiple waves of covid and tightening of restrictions. Many could not resist it, and on top of that we now find ourselves with the rise in inflation.”
Emphasizing that the Second Chance Act is not a simple procedure, the lawyer said, “You have to meet the creditors first and then try to reach an out-of-court payment settlement. If it’s not possible in the end, it’s not possible. When you go to court, it’s him who decides. In any case, most cases are this extreme. does not reach the point and is also achieved at a high rate. including debt cancellation“.
January slope intensifies most cases
The January slope, when families had to tighten their belts to bounce back from their Christmas spending, is now an insurmountable ramp for many. The majority of applications to benefit from the Second Chance Law are submitted in the first month of the year and with a clear upward trend. In the case of Alicante province, at least 1,375 requests were registered at this start of 2022, representing almost a third of last year’s total. Also, the gap to January of previous years is vast, as the number rose to 753 in 2021 and just 104 in 2020.
Attorney Ana Isabel García said: “We are in a difficult time economically and there are families looking for ways to generate more income, such as working overtime to cover their Christmas expenses. If those hopes eventually fail them, that’s when it all turns upside down.” There are also consumer loan applicants who add that García “sometimes has abusive provisions.” means.
But the problem doesn’t just affect people who are directly in debt. According to the lawyer, “We also have to deal with cases of people driven into debt, who guarantee their relatives to buy a house or start a business.”