You receive an inheritance while undergoing insolvency proceedings: what happens if you hide it?

Imagine the following scenario: you have applied for debt cancellation through a second chance procedure and you receive an inheritance, but you hide it from your creditors. This situation may have serious consequences for you, such as the revocation of the discharge of your debts. In this article, we analyse the consequences of these situations.

As you may already know, the Second Chance Law allows individuals and self-employed workers to cancel their debts when they are in a situation of severe insolvency. However, for debt cancellation to apply, one thing must prevail: the debtor’s good faith.

Among the actions considered to breach the debtor’s duty of good faith is being in a situation of insolvency and concealing from your creditors an inheritance that you receive. This derives from the Insolvency Act, which establishes that any creditor affected by the debt discharge may request the revocation of that discharge if it is proven that the debtor has concealed assets, rights or income.

What are the consequences of hiding an inheritance?

Among the obligations of a debtor who receives a discharge of their debts are the following:

• Act transparently. This means declaring all assets, rights and income they possess.
• Act in good faith. As we have already seen, concealing assets may be considered evidence of bad faith.

If the duty to act in good faith is breached because an inheritance is received and not disclosed to creditors, the following may happen: creditors could request the annulment of the debt discharge.

Cases in which the debt discharge may be revoked

The situations in which the revocation of the debt discharge may be requested are as follows:

• Where the debtor has concealed the existence of assets, rights or income.
• If, during the three years following the discharge, the debtor’s financial situation improves substantially as a result of an inheritance, legacy, donation or gambling winnings, to the extent that they are able to repay all or part of the discharged debt.
• If, at the time the discharge application was submitted, administrative proceedings concerning serious offences or infringements were ongoing and, within the following three years, a final criminal conviction or final administrative decision is issued.

Therefore, if you receive an inheritance that substantially improves your financial situation and you conceal it, the discharge may be revoked and creditors may claim the money you owe them.

Another important point must be considered: revocation cannot be requested once three years have passed since the debt discharge.

What is the revocation procedure like?

If a debtor conceals an inheritance and a creditor requests the revocation of the debt discharge, the procedure is conducted in accordance with the rules governing summary proceedings. Until the hearing takes place, any creditor may appear in support of the request for the discharge to be revoked.

Furthermore, any creditor affected by the discharge may ask the court administration to investigate the debtor’s assets electronically. If the matter concerns rights over real estate, information may be requested through the Land Registrars’ website or in person at any Land Registry office.

The steps to be followed are as follows:

• First, the application is submitted.
• Secondly, creditors appear to support the application.
• Next, the debtor’s assets are investigated.
• Finally, a decision is made regarding the revocation. If granted, the insolvency proceedings are reopened and creditors retain their rights of action against the debtor.

What do the courts say in these cases?

The courts have already examined cases in which a person whose debt was discharged under the Second Chance Law received an inheritance and concealed it. Let us look at one example:

In a judgment delivered in April 2025, the Provincial Court of Salamanca examined a case in which a debtor applied for and obtained a discharge of outstanding liabilities, that is, the cancellation of their debts, on the grounds that they lacked sufficient assets to meet debts amounting to approximately €20,000.

A few days before the debt discharge was granted, the debtor had formally accepted their father’s inheritance before a notary and received assets valued at more than €25,000. This inheritance was concealed from the court handling the insolvency proceedings. Once the creditors became aware of the inheritance, they requested the revocation of the discharge. The court held that the debtor had deliberately concealed the inheritance and had therefore acted in bad faith, resulting in the reopening of the insolvency proceedings and the revocation of the debt discharge.

What should you do if you receive an inheritance while undergoing insolvency proceedings?

If you are involved in insolvency proceedings and receive an inheritance, you must disclose the situation. Care must be taken because you are required to disclose the existence of the inheritance even if you have not formally accepted it, since there is a patrimonial right that creditors are entitled to know about. In other words, as a debtor you cannot freely decide what is or is not important to disclose if you are in a situation of severe insolvency and have obtained a debt discharge. Even if you conceal the inheritance unintentionally, you may still incur liability.

As we have seen, concealing an inheritance may lead to the revocation of the debt discharge and the reopening of the proceedings, meaning that you will once again face claims from creditors. The Second Chance Law can help you make a fresh start, but you must always act transparently and in good faith.

If you have received an inheritance or have questions relating to an inheritance, contact our team of expert inheritance lawyers so that they can assess your case and advise you.