The second chance or exoneration of unsatisfied liabilities is a possibility contemplated in the bankruptcy regulations so that natural persons, whether or not they are business owners, can benefit from a reduction in the amount of their debts, provided that they meet the established requirements and under the stipulated conditions.

This exoneration mechanism has been the subject of a profound transformation through Law 16/2022, of September 5, reforming the consolidated text of the Bankruptcy Law, both in the conditions and forms of access to it, as well as in the credits that may be affected, among other relevant modifications.

There has also been a significant change in the regulations regarding the effect of the exemption on public loans that are pending payment. Since the entry into force of the modifications contemplated in the aforementioned Law, a partial exemption of the credits whose collection management corresponds to the Tax Agency and the General Treasury of Social Security is feasible.

For this to occur, the debtor will need to have access to the discharge mechanism, which is prohibited in the case of, among others, the following persons:

• Those sentenced by a final judgment to prison terms for certain crimes in the ten years prior to the application for exoneration, unless their criminal liability has been extinguished and they have paid the relevant financial liabilities.

• That within the period of ten years prior to the application for exemption, they had been sanctioned by a final administrative resolution for very serious tax, social security or social order violations (or serious violations with a penalty of more than 5,000 euros), or when within the same period a final agreement had been issued for the transfer of liability, unless they had fully satisfied their liability.

• That your bankruptcy has been declared definitively culpable or, in the ten years prior to the application for exoneration, you have been declared an affected person in the final judgment of the qualification of the bankruptcy of a third party classified as culpable, unless on the date of submission of the application for exoneration you have fully satisfied your liability.

• That they have failed to comply with their duties of collaboration and information with respect to the bankruptcy judge and the bankruptcy administration.

• That they have provided false or misleading information or have behaved in a reckless or negligent manner when incurring debt or discharging their obligations.

Once the subjective scope of access to the exoneration has been delimited, it is necessary to determine what type of debts may be affected by this mechanism, establishing various exceptions in the regulation, among which the following debts to which the exoneration does not extend can be cited:

1. Debts arising from non-contractual civil liability, death or personal injury, as well as compensation arising from work accidents and occupational diseases.

2. Debts due to civil liability arising from crime.

3. Alimony debts.

4. Debts for wages corresponding to the last sixty days of effective work performed before the declaration of bankruptcy in an amount not exceeding three times the minimum interprofessional wage, as well as those accrued during the procedure, provided that their payment has not been assumed by the Salary Guarantee Fund.

5. Debts for public law credits. However, debts whose collection management is the responsibility of the Tax Agency may be exonerated up to a maximum amount of ten thousand euros per debtor (for the first five thousand euros of debt the exoneration will be complete, and from this figure the exoneration will reach 50% of the debt up to the maximum indicated). The aforementioned limit is joint with the Foral Treasuries. For debts for social security credits, the exemption applies in the same way as those managed by the Tax Agency.

   The exempt amount, up to the aforementioned limit, will be applied in reverse order to the priority legally established in this law and, within each class, based on its seniority.

6. Debts for fines to which the debtor has been sentenced in criminal proceedings and for very serious administrative sanctions.

7. Debts for legal costs and expenses arising from the processing of the application for exoneration.

8. Debts with real guarantees, whether for principal, interest or any other concept due, within the limits of the special privilege.

In cases where the subject meets the established requirements, he/she must choose one of the modalities that the law configures for the exemption:

1. Subject to a payment plan without prior liquidation of the assets , a novelty of Law 16/2022 being the fact that the exoneration does not imply the prior liquidation of the debtor's assets.

   The duration of the payment plan will generally be three years (five years when the debtor and his family do not live there, or when the amount of the payments depends exclusively or fundamentally on the evolution of the debtor's income and available resources), although creditors may request a modification of the plan if there is a significant change in the debtor's financial situation or request the revocation of the discharge if the plan is breached.

   The portion of the liability that is considered exonerable and will remain unsatisfied according to the plan is exonerated.

2. With liquidation of the active mass .

Any affected creditor may request the revocation of the discharge granted if it is proven that the debtor has concealed the existence of assets, rights or income, if the debtor's financial situation substantially improves due to inheritance, legacy or donation, or through a game of chance, bet or luck, during the three years following the discharge, or if at the time of the request a criminal or administrative procedure is being processed and within three years following the discharge a final conviction or administrative resolution is issued (in relation to the crimes, infractions or derivations of liability mentioned above).

The debtor may submit new applications for discharge, once the period of two years has elapsed since the final discharge with a payment plan, or five years since the resolution that granted it in the case of liquidation. These requests will in no way affect public credit, which can only be exonerated once.