ALERT: The Supreme Court opens the door for €20,000 to be forgiven to a pensioner, in debt to help his daughter and grandchildren
New information reveals that the following story has emerged from the international scene.
The Civil Chamber of the Supreme Court has declared fortuitous the bankruptcy of a pensioner who accumulated a debt of 20,242 euros between 2019 and 2020 with nine financial entities.
Faced with the criteria of the prosecutor, the commercial judge and the Provincial Court of León, the Supreme Court considers that the bankruptcy cannot be declared guilty because the money was used to help the retiree’s daughter, son-in-law and grandchildren. The family “had been left with hardly any resources” due to the job instability of the son-in-law, who worked in hospitality and was affected by an ERTE due to the Covid-19 pandemic, highlights the high court.
It was the prosecutor, not the bankruptcy administrator, who requested that the bankruptcy be classified as guilty. The law orders this to be declared when the state of insolvency is generated “due to fraud or serious negligence of the debtor.”
The prosecutor maintained that the pensioner had repeatedly resorted to bank financing “for no reason,” since he received 1,949 euros per month, enough to cover his expenses and those of his wife. Furthermore, “the need of his children and the amount of help given to them is unknown,” which is why he considered that the situation of over-indebtedness “is only due to the poor management” of the creditor.
The León Court agreed with the prosecutor. “When financing is requested it is to meet the payment at the expense of one’s own income, not to maintain and increase the debt by not meeting the committed payments,” he said.
In his opinion, “a reasonable calculation of debt is necessary, which may not be as accurate as possible when income is very low, but not with income of around 2,000 euros.” For the Court, the pensioner incurred “serious negligence” by resorting to outside financing “to give the money to his children as a mere liberality.”
“It is one thing if one of his children is incapable of providing for himself and another thing is that in a certain period they suffer an economic downturn and are helped, but reintegrating to their father what they received or part of it,” he indicated.
The Court confirmed the ruling of the Commercial Court, which in 2022 sentenced the retiree to “disqualification from managing other people’s assets for two years, as well as from representing or managing any person during the same period and to the loss of any right he had as a bankruptcy or estate creditor.”
However, the Civil Chamber of the Supreme Court has upheld an appeal by the pensioner and has classified the contest as fortuitous. This opens the door for the grandfather to benefit from the second chance law, which allows the total or partial cancellation of unpayable debts and restructuring the payment of viable ones.
“We are in the presence of a couple of pensioner grandparents over 65 years old who have helped their children at a certain time,” says the Supreme Court, which considers that the debt responded to an “exceptional situation.”
“The need to help his children was determined by an unpredictable situation, the Covid-19 pandemic, which aggravated the son-in-law’s job instability,” he points out.
“There is no scandalous over-indebtedness,” he adds, “as there are no sumptuous or disproportionate expenses for the debtor’s economic possibilities,” but rather expenses intended to “attend to the primary care needs of his family.”
“Although the economic behavior, by obtaining financing without carefully weighing the effective capacity to repay the credits obtained, could be considered negligent, serious fault is not appreciated” nor “an absence of the minimum required diligence,” states the high court.
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Source: This article was originally published in another language by El Español – Home and has been translated and adapted for our global English-speaking audience. Read the original article here.