I have a lot of debts and I can't pay

Conventional wisdom says that "he who pays rests", which is quite true, so if I have a lot of debts and cannot pay it is normal to live with a lot of anxiety and distress.

When you find yourself in a situation of insolvency, dealing with debts can be overwhelming. It's a difficult scenario to cope with when personal loans and other debts pile up, and you don't have the resources to pay them off.

However, even in the most difficult times, there are options that can give you some breathing space. One of the most effective ways is the one provided for in the Second Chance Law. We will quickly explain what it is and how our law firm in Marbella can help you.

How to end your debts

When you are faced with the overwhelming situation of not being able to pay your debts, it is crucial to take control and start managing your finances effectively. Use professionals to assess the scale of the problem: calculate your total debts, fixed instalments and monthly income.

Even if you have no assets and your income is not enough to cover your expenses, it is essential to face the harsh reality. Once you have a clear picture of your financial situation, it is time to engage in discussions with your creditors. Showing a willingness to address your debts is the first step towards financial recovery.

Our team of lawyers can help you through the whole process, so let's see what your three options are.

1. If you can't pay, negotiate the debt

When financial circumstances are difficult, debt restructuring is often an attractive option. This involves reaching new agreements with creditors to adjust payment terms and avoid default.

The first step is to carefully assess the current financial situation, taking into account all liabilities, expenses and available income. This information will provide a solid basis for negotiating with creditors and explaining the reason behind the difficulties in meeting payments.

Professional advice is essential during this process. A lawyer specialising in commercial law can ensure that any new agreement proposed by the bank is favourable to the debtor, avoiding possible higher interest rates or an increase in the total debt.

If you need guidance on how to restructure your debts effectively, do not hesitate to contact us. At Maribel Luna Abogados we specialise in helping people manage their financial problems and eliminate their debts in a legal and responsible manner.

2. Refinance debt with another personal loan or ICO

Refinance a debt through another personal loan or through an ICO loan may seem a tempting solution, especially for the bank. However, this option is not always beneficial for the debtor.

Under this scheme, the bank offers to refinance the debt through a new personal loan, which is repaid over several years and with more flexible maturities. However, the bank usually charges a new, higher interest rate, which can increase the total cost of the debt.

It is essential to carry out a thorough analysis of the terms and to assess whether the new loan arrangement is in the client's best interest. ICO loans, in particular, can be costly, so it is advisable to seek professional advice from a specialised lawyer to understand in detail the terms of this type of loan.

In any case, if the debtor finds himself in a situation where he is unable to pay his debts and lacks assets, it is advisable to consult the requirements of the Second Chance Law, which could offer a legal solution to his financial situation.

3. Second Chance Law as a lifeline

The Second Chance Law represents a lifeline for debtors, regardless of whether they own assets or not.

During this process, garnishments are stopped and new garnishments are prohibited. Although this measure is initially temporary, it can become permanent if the debtor qualifies for a discharge of unsatisfied liabilities, resulting in the cancellation of debts.

This law offers the possibility to cancel debts even when the debtor has no assets. It is specifically designed for people in critical economic situations.

It is convenient to know that there are two options within the Second Chance Law:

1. Following a payment plan without liquidating assets. This alternative is suitable for debtors without assets. In this scenario, a part of the debts is temporarily written off, while the rest is paid as agreed. However, the debtor will no longer be officially considered as a debtor.
2. Liquidate assets. For those who own assets, this option involves selling them to pay off all debts immediately.

Who can take advantage of the Second Chance Law?

Both individuals and the self-employed can benefit from this law if they meet the established requirements. For individuals, it is an option when income decreases and debts accumulate, while for the self-employed it can be a way out when they close their businesses and face debts they cannot pay.

The law allows for the cancellation of debts, both public and private, and aims to provide financial support in difficult times, facilitating the economic reintegration of those affected. It is important to be aware of this option, as no creditor wants to hinder the payment process, and the Second Chance Law can be a solution in times of financial distress.

If you have a lot of debts and do not know what to do, contact us today. We are a law firm in Marbella with extensive experience in the Second Chance Law. Even if you see everything very black, we can light the way to save you.