Judge Francisco José Soriano Guzmán is slated to speak at the Mediterranean Professions Congress. The Alicante Bar Association and the Society of Community Economists will host a roundtable in Benidorm next week to discuss developments under the Second Chance Law, a framework designed to help individuals address their debts and rebuild their financial lives. His background includes service on the Provincial Court of Alicante and membership in the Court of Justice of the European Union since 2004, along with his role as president of Commercial Court No. 19 in Madrid. He argues that regulations often favor public creditors over private sector interests, a stance that informs his perspective on the law.
The so-called Second Chance Act received final approval in 2015, but it only began to show measurable impact after 2020. The key question is why it took so long for the law to gain traction.
Various factors may be involved, with the central one being the underutilization of lawful avenues for the bankruptcy of individuals and a tendency to seek non-litigation solutions whenever possible.
Are the objectives being met?
Practical implementation is gradually picking up, yet the numbers remain well below initial projections.
Who most often seeks relief under this arrangement?
Self-employed individuals, small business owners, and increasingly, directors of bankrupt companies who carry the duty to wind up the business or settle tax obligations. Liability, including that of tax offices and its derivatives, can come into play. Courts in different provinces interpret the law with some variation; for instance, in Seville public debt relief is granted, but in Murcia it is not. The European Court of Justice in Alicante has been asked for guidance to resolve these divergences.
What shortcomings have been identified in the implementation so far?
The prevailing view is that the law falls short of delivering a true second chance for debtors whose assets have been liquidated, because public debt remains partially unresolved. This can prevent further economic activity and may push individuals toward the informal economy. In neighboring countries, liquidation typically clears all debts, including public obligations, which constitutes a full reset. The commercial division of the Alicante Court has taken initiative by asking the Court of Justice of the European Union for a preliminary ruling to clarify whether public credits can be acquitted under current rules.
Have the changes implemented at the end of last year addressed these concerns?
While the law has been amended, questions about interpretation persist among lawyers and judges, which is not an encouraging sign for stability.
Is it fair for the administration to maintain this privilege and restrict a complete write-off of debts?
It has been noted that, even with all assets liquidated, public debt enjoys preferential treatment that is only symbolically removed, not eliminated entirely. This lack of absolute write-off does not seem fully justified under the European Union’s directive on bankruptcy.
What criteria must be met to qualify?
The debtor must be bona fide, yet the law offers little explicit guidance on what this means. There are no outright exceptions, for example, for certain crimes or serious tax offenses, or for reckless behavior in meeting obligations, among other factors.
A common concern is the status of habitual residence. Can that residence be protected?
Remedies vary by commercial courts, but there is a trend toward allowing remaining assets to be retained if the debtor remains capable of meeting mortgage payments.
Will case numbers rise? Have resources been allocated?
The expectation is for an uptick as new commercial jurisdictions come online, though the pace remains uncertain.
What mechanisms exist to prevent abuse, and are there professional borrowers who exploit the system to leave debts unsettled?
Some professional borrowers can fall under a number of exceptions in the law, which can bar future access. Those who have already received relief are typically prohibited from reapplying for a period—ranging from two to five years. The practical guidance is to seek expert advice to restart a viable business and economic activity.