Having outstanding debt is an issue that can cause anxiety and worry. If you find yourself in this difficult situation, it’s important to know your rights and options, as well as the potential consequences.
In this blog post, we address the key question:
At what debt threshold can your assets be seized?
Before going into detail, it’s essential to note that seizure is an extreme measure. It’s a legal process in which the debtor’s assets are taken to cover the debt. It’s not an automatic measure; a legal process must be followed before it can be carried out.
In Spain, the seizure process is governed by the Civil Procedure Act and is a judicial proceeding. This means that if a person has an outstanding debt, the creditor must file a lawsuit to initiate the seizure process.
From that point on, the debtor will have the opportunity to present a defense and settle the debt amicably before the seizure takes place.
1. What assets can be seized?
Generally speaking, any asset of the debtor that has economic value is subject to seizure.
Therefore, real estate, bank accounts, wages, vehicles, jewelry, or other valuables may be seized.
However, certain assets are exempt from seizure. For more information, refer to Title IV on Monetary Enforcement of the Civil Procedure Act, Chapter III, Section 3.
2. How much debt must I owe before my assets can be seized?
Consequently, it is important to note that there is no specific debt amount required to carry out a seizure.
However, this measure is considered extreme and is taken only after all options for negotiation and settlement have been exhausted.
3. What is the legal procedure for seizing assets?
It is important to note that seizure is not a measure taken abruptly or arbitrarily. Before taking such action, a series of legal steps and procedures must be followed, including:
1. Notice of the debt: The creditor must formally notify the debtor of the existence of an outstanding debt and that, if it is not resolved, legal action will be considered.
2. Lawsuit: If the debtor does not settle the debt after being duly notified, the creditor may file a lawsuit to initiate the seizure process.
3. Court judgment: Once the lawsuit has been filed, the judge must issue a judgment in favor of the creditor before the seizure can take place.
4. Seizure: Once the court judgment has been issued, the creditor may proceed with the seizure.
Debtors are generally advised to try to settle outstanding debts as soon as possible to avoid the seizure process. If it is not possible to pay the debt in full, it is crucial to contact the creditor to reach a payment agreement. If the debtor does not have the resources to pay off the debt, they may be able to request a deferral or a reduction of the debt.
4. Up to what amount can tax debts be paid in installments or deferred?
Effective April 15, 2023, the Tax Agency does not require collateral for requests to defer or pay in installments debts of less than €50,000, regardless of whether the debt is in the voluntary payment period or the enforcement period.
This change will apply to deferral requests submitted on or after that date, while requests processed prior to that date will continue to be governed by the regulations in effect at the time of submission.
This measure will apply to debts managed by the Tax Agency, the bodies or agencies of the State Treasury, and state taxes transferred to the autonomous communities. However, debts specific to the autonomous communities are not affected by this change, although they typically adopt the state criteria.
It should be noted that the amount of the debt will be added both to the liability referred to in the application itself and to the debtor’s other obligations for which a deferral or installment plan has been requested but not yet approved.
For more information on the deferral or installment payment of tax debts, please see the following article.
Image by Drazen Zigic on Freepik
Image by pch.vector on Freepik
