Looking back four years, Blanca remembers believing herself to be “invincible”. On her shoulders fell the weight of the family economy, which she carried out with a job that, like her name (the one mentioned is fictitious), she prefers not to reveal. Her unexpected setback came in 2018, when she was diagnosed with an illness that first reduced her work activity and finally led to her declaration of permanent disability. The benefit that she was granted from her did not allow him to pay her usual expenses. Her income had been substantially reduced. At that time, she felt “vulnerable”, but she wanted to “solve things on her own”. And she entered a spiral of over-indebtedness. She began to request personal loans, also quick credits through the internet. She requested one to pay another. In total, there were 27 entities that she turned to. And her debt reached 219,431.47 euros.
Recently, justice has given him a second chance. The titular magistrate of the Court of First Instance number 12 of Las Palmas de Gran Canaria has approved the request for exoneration of the unsatisfied liability. That is to say, she has canceled that accumulated debt after verifying that she fulfilled the requirements demanded by law. The resolution proves that Blanca acted in good faith and that she, advised by her lawyer, Adrián Díaz-Saavedra, tried to reach an out-of-court payment agreement that was not accepted by financial and credit institutions. This rejection led to the declaration of consecutive bankruptcy proceedings, the stage of the procedure provided for in the so-called Second Chance Law (approved in February 2015) that allows requesting the forgiveness of amounts that the debtor cannot afford.
Blanca says that two factors converged at the origin of this over-indebtedness: the detection of the disease and previous personal and family problems. “I couldn’t continue working the way I did, I had to quit and it affected the economy. You think you’re going to have the ability to always work in the same way, but suddenly a blow comes to you that you don’t expect. And you say: and now, with what I have to pay, what do I do?
In his desire to keep up with his obligations and to ensure that his family’s living conditions were not affected, he began to look for solutions. And he turned to the credits. “It’s the fact of wanting to solve it without help, of saying I’m going to ask for a loan, I’m going to pay it this way, I’m going to make an effort somewhere else… But there comes a time when you have to ask for another one because you can’t pay the previous one and, when you don’t get good advice and don’t inform yourself well, in the situation you’re in you find yourself in a snowball from which you don’t know how to get out”.
She felt cheated. “You are so vulnerable in those moments that whatever they tell you you are going to believe. If they tell you to pull over here, that’s what you’re going to do. They give you credits, credits, credits. And then you think: why did they give me this credit, if they know that I couldn’t pay it? Blanca considers that part of her responsibility also falls on her. “I don’t understand the financial issue and my obligation would have been to inform myself, but they take advantage of the situation, put in very high interest rates and trick you into getting more and more indebted,” she complains.
Apart from personal loans to traditional banks, Blanca requested money from numerous easy credit entities that she found through internet searches. Lawyers specializing in banking products and consumer associations have been warning for years about the risks of going to this type of company, on which numerous convictions have already been handed down in Spanish courts. They grant loans in an agile manner, with almost immediate processing and availability and without checking the solvency of the person requesting it, and impose interest that, on occasions, has been classified as usurious according to the definition contained in the Usury Repression Law, which dates from 1908. That is, with rates “notably higher than normal money and disproportionate to the circumstances.”
“They take advantage of people who, like me, jump in when we have problems, look for solutions and like the first information we see. But you have to be very well informed, get advice, you have to know where to go”, insists this citizen of Gran Canaria.
Second Chance Law
Blanca had a superficial knowledge of the Second Chance Law when a bank employee -not her usual entity- encouraged her to contact the lawyer Adrián Díaz-Saavedra. “He must have been a little moved by the situation he was going through and he proposed that exit to me.” She remembers that at that time she had read some information in the media about this legal mechanism that allows individuals and freelancers to renegotiate or get rid of their debts. But she did not quite believe in its usefulness. “I thought it couldn’t be true. How will they forgive you? When they told me, at the outset, I put the idea aside. I kept thinking that I could solve it, I saw myself capable of being able to leave, of doing whatever it takes to get my family forward, but it ended up complicating the situation more”.
Later he began to find out, to read the law in the Official State Gazette, to find out how it worked in other European countries. “Still, it was hard for me to see it, but in the end I saw that it was the only legal and possible option, there was no other choice.” It was at that moment that she contacted the lawyer and explained the situation to him. “He explained everything to me, the steps I would have to take, if he could accept me or not. I left everything in his hands”, he recounts.
Díaz Saavedra explains that her client had already taken out some personal loans when she was working, but she was always “fulfilling her installments.” When she contracted an illness and became disabled, her income was considerably reduced. She estimates that around 40%. Aside from this procedure, Ella Blanca initiated another because she understood that the benefit she received for disability was less than what she was entitled to. And justice recognized it. Even so, the income of money in her household was still lower than usual.
The judge’s order, dated May 23, exonerates him from the payment of all debts accumulated with financial and credit institutions. With some of them, the amount exceeded 30,000 euros. With others, it was barely 100 euros. Several filed legal claims. The insolvency proceedings were classified as fortuitous, which is one in which the debtor is not considered to be guilty of the insolvency and which is attributed either to force majeure or accidental circumstances or to the person’s negligence but without intent (damage made to another voluntarily) or gross negligence, as established by bankruptcy law.
Blanca has also managed to maintain ownership of her house. “When you enter this type of bankruptcy proceedings, all your assets have to be liquidated to pay the creditors. But if the habitual residence is put up for auction, it is liquidated, and there is a mortgage loan, what is obtained from the auction who is going to be used to pay is only the bank, who has the mortgage. In this case, she continued to pay the mortgage payments, so the judge, as has happened in other cases, decides not to put it up for auction and for the person to keep their property,” explains the lawyer, who specifies that this is the only non-exempt debt.
The cancellation of the debts implies that the creditors will not be able to initiate any type of action for the collection of these amounts except, if they exist, against the “solidarity obligors, guarantors or guarantors”. In addition, the rule stipulates a period of five years from the resolution to be able to revoke that decision if it is shown in this period that the debtor had concealed the existence of assets and rights. It must be remembered that, in addition to the requirements of good faith and attempted out-of-court settlement, the law requires that the creditors have not been found guilty and that the person requesting this benefit has not been firmly convicted of crimes against property. , against the socioeconomic order, against the Public Treasury and Social Security, against the rights of workers or for false documents in the previous ten years.