Courtesy of Mish.
Under a new set of family insolvency laws in Spain, those who have stopped paying their mortgage will be shielded from eviction from their homes.
Via translation from El Confidential, please consider Changing the Bankruptcy Law.
A bill in Parliament proposes new regulations on family insolvencies and will protect from eviction all those individuals who have suspended mortgage payments. The reform centers around rights of the 'consumer debtor' which will have full legal guarantees to negotiate funding agreements with creditors for half of the accrued liability and take up to fifteen years to pay.
The measure is justified by the massive overhang of family suffering in Spain, currently condemning many to full settlement and consequent total ruin of those who go through a bankruptcy process.
Currently, citizens drowned by their financial situation are usually first evicted from their homes and then have to drag existing debt perpetually throughout their working and social life.
The key amendment is on the table prior work involves a negotiation process that empowers the consumer to inform the Court their willingness to reach an agreement with its creditors. The deadline to apply this voluntary refinancing process is two months from the date it becomes impossible for someone to meet payment obligations.
The mere communication to the court of the start of negotiations suspends any eviction proceedings, including those declaratory judgments that may already be in process.
The law also amends substantial aspects of the settlement process in cases where a person fails to reach an agreement with creditors.
The liquidation plan will take into consideration assets of 'consumer debtor' while prioritizing the essential livelihood of the affected person.
The bill has an aim of preserving basic necessities and will also guarantee a 'fresh start' or second chance for people doomed to a dramatic insolvency. To that end, and in the worst case, the court may totally wipe out all existing debts including that portion not covered by asset liquidation. This is a radical change from the current procedural process.
Issues and Questions
How many will stop paying their mortgage simply to start a negotiation process?
How much harder will it be for someone to get a mortgage? …
