The Bankruptcy Proceedings Act in article 178 bis
provides a beneficial procedure for exemption from unpaid debt for
debtors. This is known as the second chance mechanism, and it is
applicable only to individuals, not companies.
The purpose of this mechanism is to enable those individuals who
have lost their assets to start over without having to carry a debt
all their lives that they can never settle. To this end, a judicial
procedure is stipulated by which over-indebted individuals, who
have acted in good faith, can be released from the responsibility
of most of their outstanding debts after bankruptcy liquidation
proceedings.
As a preliminary step to the procedure for debt exemption, first
the bankruptcy proceedings must be carried out, and once they are
completed due to liquidation or insufficient assets, exoneration
from unpaid debt may be requested.
