When bankruptcy proceedings are discussed, people often picture large corporations facing years of processes ending in liquidation. Yet since the enactment of the so‑called Second Chance Law in 2015, more individuals have turned to this mechanism to resolve their debts. The trend has accelerated recently, and for the first time natural persons who are not in business were the majority of applications filed in Alicante courts.
The trend is expected to continue upward after the recent bankruptcy law reform that took effect last autumn, which further simplifies procedures and shortens deadlines.
The figures speak clearly. According to data from the General Council of the Judiciary, during 2022 the province saw 1,025 bankruptcy filings by creditors, up 35% from the previous year and the highest level in the historical series. That is nearly three filings per day.
However, a closer look shows that, despite uncertainties and rising costs, filings by companies remained nearly unchanged, with 306 cases registered versus 308 the year before. There was, however, a noticeable rise in bankruptcies among self‑employed individuals, or those who ran their own businesses, reaching 148 in total compared with 128 in 2021. And what increased most substantially were the filings by individuals, which added 571 cases, a 325% rise from the previous year.
Behind the surge in personal bankruptcies, professionals point to several factors. Greater awareness of the law itself and the possibility of becoming debt‑free have changed perceptions. Years ago it would have been unthinkable for someone to carry the stigma of default, but the second chance framework has shifted that view.
Economic forces also play a role. “Many people were touched by the pandemic; many self‑employed individuals were unable to revive their businesses,” notes the head of the Bankruptcy Law Department at the Alicante Bar Association, Luis Fernando Alonso Saura. He explains that most proceedings reaching the courts were non‑mass bankruptcies, meaning the applicant had no substantial assets to dispose of.
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A shared assessment by Antonio Galve, legal director of Repara tu Deuda, a firm that has emerged as a specialist in recent years, highlights the profile of many clients. “Many people saw their income cut, those who were late in entering ERTE and finding income, or who had to close a business, sought financing to survive. Those who cannot pay at the moment are among the most common cases we see.”
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Another factor noted by this specialist is the moratorium introduced at the end of July. The government exempted the obligation to declare bankruptcy, a change that has since led to more pending cases. More importantly, changes to the Bankruptcy Law encourage debtors to use this mechanism by streamlining procedures, for instance by removing the mandatory mediation with creditors before filing or by dispensing with the bankruptcy administrator role unless a creditor requests it.
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Luis Fernando Alonso Saura, head of Bankruptcy Law at the Alicante Bar Association, foresees an uptick in corporate bankruptcies in the coming months, driven by the expiration of ICO loans that were meant to guarantee liquidity for firms under restrictions and the inability of many companies to repay them. This is compounded by treasury challenges stemming from weaker economic activity or higher costs.
[citation: General Council of the Judiciary, 2022 annual report; Alicante Bar Association statements; Repara tu Deuda insights]