The Supreme Court has ruled in favor of a retiree who became “overindebted” in times of covid to help his daughter and son-in-law, who was dedicated to hospitality and entered into a temporary employment regulation file (ERTE). The man declared bankruptcy – all of them banks and other financial entities – and, although the bankruptcy administrator advocated for it to be declared fortuitous, Justice followed the prosecutor’s criteria and classified him as guilty. The high court now corrects this decision by considering that the retiree was only trying to support his family, thereby allowing him to benefit from the .
According to the ruling of the Civil Chamber of the Supreme Court, to which EL PAÍS has had access, the events date back to 2019 and 2020. Due to the crisis unleashed by the coronavirus pandemic, his son-in-law was left without a job and the man, to cover the basic needs of his family – which included him, his wife (also retired), his daughter, her husband and their children – went into debt through several loans. for a total amount of 20,242 euros. The pensioner could not meet the debt, since he received a gross annual income of 27,869 euros, which translated into about 1,949 euros per month net, and in 2021 he was declared bankrupt.
The bankruptcy administration proposed that the bankruptcy be declared fortuitous, taking into account that the financial situation of the couple was a consequence of “their children being left unemployed and in ERTE and they requested loans to help them, becoming over-indebted.” However, the prosecutor demanded that it be classified as guilty. In his opinion, “having sufficient income to meet his ordinary needs,” the man sought financing “for no reason.”
The commercial court sided with the public ministry in considering that this retiree “got into debt beyond his ability to repay the amount of the loans” and, “therefore, knowing the impossibility of doing so, to attend to other people’s needs and over which he had no legal duty to do so.” “Therefore, it is not a question of poor foresight in the economic and financial management of the life of the bankrupt, but rather a voluntary and conscious decision to obtain money on loan with the knowledge of the impossibility of its return,” he stated.
A mere “marriage of grandparents”
The man appealed until he reached the Supreme Court, alleging that they are just “a couple of pensioner grandparents over 65 years old who have helped their children at a certain point by going into debt” due to “an unpredictable situation”, such as the health crisis.
The First Chamber accepts his claims and amends the previous rulings by ruling out the guilt of the retiree. The magistrates assess that there is no “scandalous over-indebtedness” and that those 20,000 euros were allocated to “vital needs of the family, without evidence of sumptuous or disproportionate expenses for the financial possibilities of the debtor.” They also take into account “the exceptional situation” caused by the covid-19 pandemic. Thus, although they concede that “the economic behavior, by obtaining financing without carefully weighing the effective capacity to repay the credits obtained” could be considered “negligent,” they resolve that there is no “serious fault.”
The main consequence of this change in qualification is that it will allow the man to access the advantages of total or partial cancellation of the so-called unpayable debts or restructuring of the viable ones offered by the Second Chance Law, since, except in exceptional cases, it is prohibited for those who are declared in guilty bankruptcy.
