The Barcelona justice system wants to stop the scam in bankruptcy proceedings involving individuals who go to court to obtain forgiveness of their debts.
Since the reform of the bankruptcy law came into force in September 2022, the procedure has been simplified and the courts have received an avalanche of requests promoted by companies that have announced with great fanfare the ease of obtaining debt relief. “We estimate that a quarter of the debtors do not have the right to obtain forgiveness because in reality they have the capacity to satisfy the liabilities,” comments Judge Ignacio Fernández de Senespleda, head of commercial court number 10. Another quarter of the debtors, assures , “they are over-indebted people who have financial capacity but lack a savings culture” while “half of the debtors are individuals in a precarious situation who are carrying the effects of the financial crisis.” Against this backdrop, the twelve commercial courts of Barcelona have agreed to increase control. “We seek to increase the transparency of the process and avoid scams,” says Judge José María Fernández Seijo, head of commercial court number 11.
According to the agreement of unification of criteria (published in mid-December), the courts consider the salary as the active mass of the bankruptcy as long as the amount exceeds the Minimum Interprofessional Salary, can cover the expenses of the bankruptcy and satisfy the basic needs of the debtor. This amount will vary depending on each case, but as a guide it is 1,800 euros per month. In any case, the key will be to prove that the debtor can make a “reasonable effort” to repay the debts. If so, the bankruptcy will be declared with active assets, a bankruptcy administrator will be appointed (who will supervise the process) and a payment plan will be agreed upon that will oblige the debtor to return all or part of the debt within a period of 3 or 5 years.
The Barcelona justice system – which has been a pioneer in other bankruptcy issues such as the creation of the pre-pack process to speed up the sale of the productive unit – wants to make the population aware that not everything goes when it comes to requesting debt forgiveness. Lawyer Josep Pujolràs, from the RocaJunyent firm, considers that “the criteria are adequate to bring the law closer to reality and to adequately base judicial decisions and avoid practices that harm creditors.”
Cristian Valcárcel, from the RCD law firm, maintains that “the intention is good to avoid abuses” but that “it remains to be seen the effectiveness of the criteria and the real amount that will be returned to the creditors.” He also points out that “the fact that administrators are appointed in these competitions could collapse the courts even more since the processes will be slower.”
In addition to the salary issue, the Barcelona justice system has also agreed to require the debtor to have an official appraisal of the value of their properties if they have them. The deed and any other valuation from an appraisal entity approved by the Bank of Spain will serve. “This will avoid less rigorous appraisals, such as those obtained for free over the Internet,” says Valcárcel.
The agreements also include the creation of a single form for bankruptcy proceedings that aims to simplify work in the courts. Judicial sources admit that they are overwhelmed. “In 2023, each commercial court processed an average of about 800 contests, which represents a workload three times greater than expected. 75% were from natural persons,” they state.
