Personal Insolvency in Portugal in 2026: A Practical Guide to the Exoneracao do Passivo Restante, the Three Years of Ceded Income, the 300,000 Euro Small-Debtor Route, and the Four Debts a Discharge Never Clears

Portuguese law has a route out of unpayable personal debt. It is not well known among foreign residents, it is not the same thing as company insolvency even though it lives in the same code, and it has a small number of hard deadlines and one silent trap that can cost a debtor the whole benefit before the process has properly started.

This guide sets out how personal insolvency and the exoneração do passivo restante, the discharge of remaining liabilities, work in 2026. Everything here comes from the Código da Insolvência e da Recuperação de Empresas (Insolvency and Corporate Recovery Code, CIRE), approved by Decreto-Lei n.º 53/2004 and substantially rewritten for individuals by Lei n.º 9/2022 of 11 January, which transposed the EU restructuring and insolvency directive. Article numbers are given so that anything can be checked.

When You Are Legally Insolvent

Article 3(1) sets one test for a natural person, and it is a cash-flow test rather than a balance-sheet one. You are insolvent when you are unable to meet your obligations as they fall due. Owing more than you own is not, by itself, insolvency for an individual: a person with a mortgage larger than the value of the house who is paying it every month is not insolvent, and a person with substantial equity who cannot service anything is.

Article 3(4) adds a point that matters for timing. Merely imminent insolvency counts as actual insolvency, but only where the debtor files. You may go to court on the strength of a collapse you can see coming; a creditor may not.

You Are Not Obliged to File, but Waiting Has a Price

Article 18(1) imposes a duty on a debtor to apply for a declaration of insolvency within 30 days of learning of the situation. Article 18(2)(b) then exempts natural persons who do not own a business at the moment they become insolvent. Most private individuals therefore have no legal obligation to file at all.

That exemption is real, and it is routinely misread as meaning that delay is free. It is not. Article 238(1)(d) blocks the discharge where a debtor who was not obliged to file nonetheless refrained from doing so for the six months following the onset of insolvency, where creditors were harmed by the delay and where the debtor knew, or could not have been unaware without gross fault, that there was no serious prospect of the situation improving.

The practical effect is a soft six-month clock. Nobody will prosecute you for missing it. But a creditor or the insolvency administrator can raise it later to defeat the very relief the process is being used to obtain, and the test is about what you knew, so a debtor who waited two years while making token payments and hoping is in a materially worse position than one who filed at nine months with an explanation.

When a Creditor Can File Against You

Article 20(1) lets any creditor, anyone legally responsible for the debts, or the Ministério Público (Public Prosecutor) apply for a declaration of insolvency on any of a list of grounds. Two of them account for most personal cases.

Ground (e) is that an enforcement action against you has already established that you do not have enough seizable assets to pay the claim. This is the direct bridge from an ordinary penhora: once an enforcement agent has certified that there is nothing left worth taking, that certificate is itself a ground for a creditor to escalate.

Ground (g) is a generalised default over the last six months on any of four categories: tax; social security contributions; debts arising from an employment contract or its breach or termination; and rent of any kind, including finance leases, instalments of a purchase price, or payments on a mortgage-secured loan over the place where you live or work. Ground (b) is broader still: failure to meet one or more obligations that, by amount or circumstances, shows you cannot meet your obligations generally.

The Box You Must Tick

Article 23(2)(a) requires the petition to state whether the insolvency is current or merely imminent and, where the debtor is a natural person, whether the debtor wants the exoneração do passivo restante.

Article 236(1) sets the outer limits. The request is made either in the petition or within 10 days of being served, and it is always rejected if made after the creditors' meeting to consider the administrator's report or, where that meeting is dispensed with, after the 60 days that follow the insolvency judgment. In the intermediate period the judge decides freely whether to admit it.

Where the process was started by a creditor rather than by you, Article 236(2) requires the summons itself to tell you that you can ask for the discharge. That is a genuine protection, and it is also the last reliable warning you will get. Miss the window and the entire mechanism is closed for that insolvency, no matter how deserving the case.

The Small-Debtor Chapter and the 300,000 Euro Line

Chapter II of Title XII sets up a lighter procedure. Under Article 249(1), it applies where the debtor is a natural person and, in the alternative, either has not owned a business in the three years before the process began, or, at the date the process starts, has no employment-related debts, no more than 20 creditors and total liabilities not exceeding 300,000 euros. Where a married couple files together, Article 249(2) requires the conditions to be met by each spouse separately.

Falling inside the chapter has one immediate consequence under Article 250: the insolvency-plan and debtor-in-possession regimes do not apply. What it opens instead is the payment plan.

Route One: the Payment Plan

Article 251 lets the debtor file a plano de pagamentos aos credores together with the petition. Article 252 says what can go into it: moratoria, write-offs, new guarantees, the total or partial extinction of existing security or preferences, a timetable of payments or a single payment, and any concrete measures the debtor will take to improve their position. Disputed claims can be included with the money set aside on deposit pending resolution. Filing a plan is itself a confession of insolvency, at least imminent, under Article 252(4), and it must be accompanied by a list of available assets and income, an alphabetical list of creditors and addresses with amounts, nature and any security, and a declaration that the information is true and complete.

Three features of the approval mechanism are worth knowing before you use it.

Silence is consent. Under Article 256(3)(a), creditors get 10 days to respond, and a creditor who says nothing is treated as having adhered to the plan.

A creditor who does not correct the debtor's figures is bound by them. Article 256(3)(b) requires creditors to correct the information about their claims within the same 10 days, failing which, if the plan is approved, the debtor's version is treated as accepted and any other debts the creditor failed to report are forgiven.

Two thirds can bind the rest. Under Article 258(1), if creditors representing more than two thirds of the total value of the claims listed by the debtor accept the plan, the court can override the others, provided no objector ends up economically worse off than they would have been in a full insolvency with liquidation and discharge, no objector is subject to unjustified discriminatory treatment, and no objector raises legitimate doubts about the completeness of the debtor's list.

The payoff comes at Article 259. The judge approves the plan by judgment, then declares the insolvency in the main process, and both judgments close the process once final. Article 259(5) is the provision that makes this route worth serious consideration: those judgments and the closure decision are not subject to any publicity or registration. A full insolvency is published and registered. A homologated payment plan is not.

Article 260 is the counterweight: if the plan is breached, the moratorium or write-off it granted falls away.

The Trap in Article 254

This is the single most expensive mistake available in the whole procedure, and it takes one sentence to avoid.

Article 254 provides that a debtor who, when filing a payment plan, did not declare that they want the exoneração do passivo restante in the event that the plan is not approved cannot later benefit from it.

A debtor who files a plan in good faith, believing the creditors will accept it, and who therefore sees no reason to ask for a discharge at the same time, loses the discharge permanently if the plan fails. The two requests are not alternatives to be chosen between. The plan is the primary ask and the discharge is the fallback, and both go in at the same time.

Route Two: the Discharge

Article 235 states the principle. Where the debtor is a natural person, they may be granted release from the insolvency claims that are not paid in full in the process or in the three years following its closure. That three-year figure is the headline change made by Lei n.º 9/2022; before it, the period was five.

Article 237 breaks the grant into four steps: no ground for summary rejection under Article 238; an initial order in which the judge declares that the discharge will be granted once the debtor observes the conditions in Article 239 for three years; no approved and homologated insolvency plan; and, at the end of that period and if the conditions were actually met, a final order granting the discharge.

The Seven Bars

Article 238(1) requires summary rejection of the request where:

• it is out of time;
• the debtor, with intent or gross fault, gave false or incomplete written information about their financial circumstances in the three years before the process began, in order to obtain credit or public subsidies or to avoid paying public bodies;
• the debtor has already had a discharge in the 10 years before the process began;
• the debtor breached the duty to file, or, not being obliged to file, refrained from doing so for the six months after becoming insolvent, in either case to the creditors' detriment and knowing there was no serious prospect of improvement;
• material is already on file, or is supplied by creditors or the administrator before the decision, indicating in all probability that the debtor was culpable in creating or worsening the insolvency under Article 186;
• the debtor has a final conviction for one of the insolvency-related offences in articles 227 to 229 of the Código Penal (Penal Code) in the 10 years before the application, or afterwards;
• the debtor, with intent or gross fault, breached the duties of information, presentation and cooperation the Code imposes during the process.

The last of those is the one debtors most often walk into by accident, because it is not about the original debts at all. It is about conduct during the case.

The Three Years of Ceded Income

Article 239(2) is the substance of the bargain. For the three years after the process closes, the debtor's disposable income is treated as assigned to a fiduciário, a trustee chosen by the court from the official list of insolvency administrators.

Article 239(3) defines what is not disposable, and this is where a debtor's standard of living during the three years is actually decided. Excluded is what is reasonably necessary for the minimally dignified support of the debtor and their household, which, absent a reasoned judicial decision otherwise, must not exceed three times the national minimum wage; what is needed for the debtor to carry on their profession; and any other expenses the judge allows in the initial order or later on application. With the 2026 minimum wage at 920 euros under Decreto-Lei n.º 139/2025, the statutory ceiling on protected income is 2,760 euros a month. It is a ceiling and not an entitlement: the ordinary figure is whatever the judge finds is reasonably necessary, and the cap only bites on higher earners.

Article 239(4) imposes four duties for the whole period. Do not conceal income, and report income and assets to the court and the trustee when asked. Work, do not leave a job without legitimate reason, look diligently for work when unemployed, and do not unreasonably refuse suitable employment. Hand over the ceded portion immediately on receiving it. Report any change of address or employment conditions within 10 days. A fifth rule sits alongside them: make no payments to insolvency creditors except through the trustee, and give none of them any special advantage.

Article 239(5) makes the assignment prevail over any contractual clause purporting to exclude or limit it.

Where the Money Goes

Article 241(1) sets the order in which the trustee applies what is collected, at the end of each year of the period: outstanding court costs first; then reimbursement of the Ministry of Justice for the administrator's and the trustee's fees and expenses it has borne; then the trustee's own accrued fee and expenses; and only then distribution of the remainder to creditors whose claims have been verified and ranked by judgment. Article 240(1) confirms that the trustee's remuneration is a cost borne by the debtor.

Debtors are often surprised by this. In a modest case it is entirely possible for three years of ceded income to be consumed by the machinery of the process and for creditors to receive nothing. That does not affect the discharge, which turns on compliance rather than on recovery.

Protection During the Period

Article 242(1) prohibits any enforcement against the debtor's assets for insolvency claims during the assignment period. This is the shield. Article 242(2) makes any special advantage granted to one creditor void.

Article 242-A, added by Lei n.º 9/2022, allows the judge to extend the assignment period by up to three further years, once only, on a reasoned application from the debtor, a creditor, the administrator or a supervising trustee, and only where the judge concludes there is a serious probability that the debtor will comply during the extra period.

Losing It Early, and the Final Decision

Article 243(1) requires the judge to refuse the discharge before the end of the period, on a reasoned application, where the debtor intentionally or with gross negligence breached an Article 239 duty and thereby prejudiced recovery; where one of the grounds in Article 238(1)(b), (e) or (f) emerges afterwards; or where the insolvency has been classified as culpable. Applications must be brought within six months of the applicant learning of the grounds. Article 243(3) adds a rule of its own: the discharge is always refused if the debtor, without reasonable cause, fails to provide information proving compliance within the time set, or fails without justification to attend the hearing at which it should be given.

Article 244(1) requires the judge, within 10 days of the end of the period and after hearing the debtor, the trustee and the creditors, to decide either on an extension or on the discharge itself.

The Four Debts a Discharge Never Clears

Article 245(1) extinguishes all insolvency claims still outstanding when the discharge is granted, including claims that were never lodged or verified. Article 245(2) then carves out four categories, and this is the part of the law most often misunderstood:

• maintenance claims;
• compensation for intentional unlawful acts committed by the debtor, where claimed as such;
• fines, coimas and other pecuniary sanctions for crimes or administrative offences;
• tax and social security claims.

A person who goes through a full personal insolvency and completes three years of ceded income emerges owing the Autoridade Tributária (Tax Authority) and Segurança Social (Social Security) exactly what they owed before. For a self-employed resident whose problem is principally accumulated tax and contributions, the discharge may deliver very little, and the ordinary limitation periods on those debts, eight years for tax under the Lei Geral Tributária and five for social security contributions, are the more relevant mechanism.

Article 246 allows the discharge to be revoked, but only until the end of the year following the order becoming final, and revocation reconstitutes every extinguished claim.

What It Costs

Article 248(1) defers payment of court costs until the final decision on the discharge request, to the extent that the insolvent estate and the debtor's disposable income during the assignment period are insufficient to pay them in full, and does the same for the obligation to reimburse the Ministry of Justice. Where the discharge is granted, Article 33 of the Regulamento das Custas Processuais (Procedural Costs Regulation) governs payment, which in practice means instalments. If the discharge is later revoked, that authorisation lapses and default interest is added as if the benefit had never been given.

Two provisions deal with the genuinely asset-less case. Article 232(7) presumes the estate is insufficient where assets are below 5,000 euros, and Article 232(2) requires the judge to close the process on that basis unless an interested party deposits what the court considers necessary to cover costs. Article 39 covers the same problem at the outset: where the judge concludes on the judgment that the estate will not cover costs, and nobody applies to have the judgment completed, the debtor does not lose the power to administer and dispose of their own property, and the process ends when the judgment becomes final.

Legal aid through Segurança Social is available on a means test and covers appointment of a lawyer and exemption from or deferral of the court fee. Article 248-A, added in 2022, sets the value of the case for appeal purposes as the liabilities to be discharged.

The Step Before Insolvency

There is a pre-insolvency route that avoids a declaration of insolvency altogether. The processo especial para acordo de pagamento (special payment agreement process), in articles 222-A to 222-J, is open to a debtor who is not a business and who is demonstrably in a difficult economic situation or merely imminent insolvency. Article 222-B defines the difficult economic situation as serious difficulty in meeting obligations on time, in particular through lack of liquidity or inability to obtain credit.

It starts with a written declaration signed by the debtor and at least one creditor stating an intention to negotiate, filed at the court that would be competent to declare the insolvency, with a list of all pending debt-collection actions, proof of income and of employment or unemployment status. The judge appoints a provisional judicial administrator immediately. Under Article 222-C(6) that administrator's fee is a cost borne by the debtor, unless the debtor has legal aid in the form of exemption from the court fee and other charges, in which case the Ministry of Justice pays.

The trade-off is straightforward. This route needs at least one creditor willing to come to the table, and it produces an agreement rather than a discharge. It leaves no insolvency on your record.

The Practical Points

• Ask for the discharge in the petition. Article 23(2)(a) provides the box and Article 236(1) closes the window quickly. If you file a payment plan, Article 254 means you must also declare that you want the discharge should the plan fail. One missing sentence forfeits the entire benefit.
• If a creditor started the process, read the summons. It must tell you about both the discharge and the payment plan, and you have 10 days from service for the first and the time allowed for a defence for the second.
• Check whether you fall inside Article 249. No business in the last three years, or no employment debts, 20 creditors or fewer and liabilities under 300,000 euros, opens the payment-plan route, and a homologated plan carries no publicity and no registration.
• Do not wait indefinitely. You are probably not obliged to file, but Article 238(1)(d) turns a six-month delay that harms creditors into a bar on the discharge.
• Expect the three years to be lived at close to a subsistence figure. The protected amount is what the judge finds reasonably necessary for you and your household, and the statutory ceiling of three times the minimum wage, 2,760 euros a month in 2026, is a maximum rather than a norm.
• Report changes within 10 days. Address and employment changes under Article 239(4)(d) are the most commonly missed obligation, and breaches of the Article 239 duties are what Article 243 uses to end the process early.
• Do not pay a creditor directly during the period. Everything goes through the trustee. A direct payment is both a breach of Article 239(4)(e) and, if it advantages one creditor, void under Article 242(2).
• If your problem is mostly tax and social security, take advice before filing. Article 245(2)(d) excludes both from the discharge, and three years of ceded income will not remove them.

The system is more forgiving than its reputation and considerably more technical than it looks. Three years is a short assignment period by European standards, the protection against enforcement during it is absolute for insolvency claims, and the payment-plan route can resolve a modest case without anything appearing on a public register. What it will not do is deal with the Fisco, and what it does not forgive is a missed deadline in the first fortnight.