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Declaring Personal Insolvency in Portugal

Researched and written with AI tools from official sources. How we make our guides

How personal insolvency works in Portugal: the discharge of debts after three years, the deadlines that close it, payment plans, and the debts it never clears.

The Portugal Brief 10 min read

Declaring Personal Insolvency in Portugal

Last verified: October 2026.

Who this is for

  • You live in Portugal and cannot pay your personal debts as they fall due.
  • A creditor has started insolvency proceedings against you, or is threatening to.
  • You are employed, retired, or out of work, and want to know whether debts can be written off.

Not for you if: you are closing a company. Read Closing a Business in Portugal instead.

Portuguese law lets a person who cannot pay their debts go to court and, in the end, have most of what is left written off. This is called the discharge of remaining debts (exoneração do passivo restante). You hand over part of your income to a court-appointed trustee for three years after the insolvency case closes. If you keep the rules, the judge then cancels the debts still unpaid. Tax, social security, fines, and child maintenance are never cancelled. The most important step is the first one: you must ask for the discharge in time, or you lose it.

When you count as insolvent

For a private person, the test is about cash, not about what you own. You are insolvent when you cannot pay your debts as they fall due. Owing more than your house is worth does not make you insolvent if you keep paying every month.

You may also go to court yourself when insolvency is close but has not yet happened. A creditor cannot use that "imminent" ground against you; only you can.

You do not have to file, but waiting can cost you

A private person who does not run a business has no legal duty to file for insolvency. Business owners must file within 30 days of knowing they are insolvent.

Delay still has a price. The judge must refuse the discharge if all of these are true:

  • you waited more than six months after becoming insolvent;
  • the delay harmed your creditors; and
  • you knew, or should have known, that your situation had no real chance of getting better.

Nobody fines you for waiting. But a creditor can raise this later to block the debt write-off. If you can see that things will not improve, do not drift for years making token payments.

When a creditor can file against you

Any creditor, or the Public Prosecutor's Office (Ministério Público), can ask the court to declare you insolvent. The most common grounds in personal cases are:

  • an enforcement case has already found that you do not have enough assets to seize to pay the debt;
  • you have generally stopped paying, for six months, any of these: tax, social security contributions, debts from an employment contract, or rent or mortgage payments on your home;
  • you have failed to pay one or more debts in a way that shows you cannot pay your debts in general.

An enforcement case is the usual starting point. If an enforcement agent finds nothing worth seizing, the creditor can use that finding to ask for your insolvency. See When a Creditor Seizes Your Pay or Bank Account in Portugal.

The deadline that matters most

You must ask for the discharge yourself. The rules are strict:

  1. If you file for insolvency, say in your court petition that you want the discharge. The petition must also say whether your insolvency is current or only imminent.
  2. If a creditor filed, ask within 10 days of being served with the court papers. The papers must tell you that you can ask.
  3. After the creditors' meeting on the administrator's report, the request is always refused. If there is no meeting, the cut-off is 60 days after the insolvency judgment. Between the 10 days and that cut-off, the judge decides freely whether to accept a late request.

If you miss the window, the write-off is closed for that insolvency, however strong your case.

The small-debtor route and the payment plan

A lighter procedure applies to private people who either:

  • have not run a business in the three years before the case; or
  • when the case starts, owe no wages to employees, have no more than 20 creditors, and owe €300,000 or less in total.

If a married couple files together, each spouse must meet these conditions.

In this procedure you can file a payment plan (plano de pagamentos) with your petition. It can offer a timetable of payments, a single payment, a pause on payments, or a partial write-off. You attach:

  • a statement that you meet the small-debtor conditions;
  • a list of your assets and income, plus a short summary;
  • an alphabetical list of your creditors, their addresses, what you owe each one, and any security they hold;
  • a statement that the information is true and complete.

Filing a plan counts as admitting that you are insolvent, at least imminently.

How creditors approve it. Each creditor gets 10 days to respond. A creditor who says nothing is treated as accepting the plan. A creditor who does not correct your figures in those 10 days is bound by them if the plan is approved. If creditors holding more than two thirds of the debts accept, the court can impose the plan on the rest. It can only do so if no objecting creditor ends up worse off than in a full insolvency, and none is treated unfairly.

Why it is worth trying. If the judge approves the plan, the case closes. The approval and the insolvency judgment are not published or registered. A full insolvency is. If you later break the plan, the pause or write-off it gave you is cancelled.

The trap when you file a plan

If you file a payment plan, you must also say, at the same time, that you want the discharge in case the plan is not approved. If you leave this out and creditors reject the plan, you can never get the discharge in that case.

Treat the plan as your first request and the discharge as your fallback. Put both in the same filing.

If a creditor started the case, the court papers must tell you that you can file a payment plan instead of a defence. You have the same time limit as for the defence.

How the discharge works

The discharge comes in stages:

  1. The initial order. If there is no reason to refuse, the judge declares that you will get the discharge once you keep the rules for three years after the case closes.
  2. The three-year period. Your "available income" is assigned to a trustee (fiduciário) chosen from the official list of insolvency administrators.
  3. The final decision. Within 10 days after the three years end, the judge hears you, the trustee, and the creditors. The judge then grants or refuses the discharge, or extends the period.

The initial order and the final discharge decision are published and registered.

Reasons the judge must refuse it at the start

The judge must refuse your request if:

  • it is late;
  • in the three years before the case, you deliberately or very carelessly gave false or incomplete written information about your finances to get credit or public money, or to avoid paying public bodies;
  • you already had a discharge in the previous 10 years;
  • you waited more than six months to file, as explained above;
  • the evidence strongly suggests you caused or worsened your insolvency through your own fault;
  • you have a final conviction for certain insolvency crimes in the 10 years before the case, or since;
  • you deliberately or very carelessly broke your duties to inform and cooperate during the case.

The last point is about how you behave during the case, not about the original debts. Answer the court and the administrator fully and on time.

The three years: what you keep and what you hand over

Everything you earn counts as available income, except:

  • what is reasonably needed for a minimally decent life for you and your household. Unless the judge gives reasons to go higher, this cannot be more than three times the minimum wage: €2,760 a month in 2026, with the minimum wage at €920;
  • what you need to keep working in your job;
  • other expenses the judge allows, at the start or later on your request.

The €2,760 is a ceiling, not an allowance. The judge sets the amount you actually keep based on your real needs.

During the three years you must:

  • not hide any income, and tell the court and the trustee about your income and assets when asked;
  • work, not leave a job without good reason, look hard for work if unemployed, and not unreasonably refuse a suitable job;
  • hand the assigned part of your income to the trustee as soon as you receive it;
  • tell the court and the trustee about any change of address or job conditions within 10 days;
  • not pay any insolvency creditor except through the trustee, and not give any creditor special advantages.

Where the money goes

At the end of each year, the trustee uses what you handed over in this order:

  1. unpaid court costs of the insolvency case;
  2. repaying the Ministry of Justice for any administrator and trustee fees it paid;
  3. the trustee's own fees and expenses;
  4. anything left, shared among your creditors.

The trustee's fees are your cost. In a small case, the money may all go on costs, and creditors may get nothing. That does not stop the discharge. What counts is that you kept the rules.

Protection while it lasts. Creditors cannot start or continue enforcement against your assets for insolvency debts during the three years. Any special advantage given to one creditor is void.

Extensions. Before the period ends, the judge can extend it once, by up to three more years. You, a creditor, the administrator, or a supervising trustee can ask. The judge only agrees if you are seriously likely to keep the rules in the extra time.

Losing the discharge

Before the three years end, a creditor, the administrator, or the trustee can ask the judge to refuse the discharge early. The judge must do so if:

  • you deliberately or with gross negligence broke one of your duties, and this harmed your creditors;
  • a ground for refusal at the start comes to light later; or
  • the court finds that you caused or worsened your insolvency through your own fault.

The request must be made within six months of learning the grounds. The discharge is always refused if, without good reason, you fail to give proof that you kept the rules by the deadline, or miss the hearing where you should give it.

Even after the discharge, it can be revoked until the end of the year after it becomes final. All the cancelled debts then come back.

The debts a discharge never clears

The discharge cancels every insolvency debt still unpaid when it is granted. This includes debts that creditors never claimed in the case. Four kinds of debt are never cancelled:

  • maintenance (alimentos), including child support;
  • compensation for harm you caused on purpose, where claimed as such;
  • fines and other penalties for crimes or administrative offences;
  • tax and social security debts.

If your main problem is tax or social security, insolvency will not remove it. You will still owe the tax office (Finanças) and Social Security (Segurança Social) after three years. Tax debts expire after eight years, and social security debts after five, subject to things that pause or restart the clock. See When a Debt Expires in Portugal. Take advice before you file.

What it costs

If you ask for the discharge, you can defer court costs until the final decision. This covers the part that your assets and the income you hand over cannot pay. The same applies to repaying the Ministry of Justice for the administrator's and trustee's fees. If you get the discharge, you can pay what is left in instalments. If the discharge is later revoked, the instalments end and late-payment interest is added.

The law presumes your assets cannot cover the costs if they are worth less than €5,000. That rule does not apply if you asked for the discharge before the insolvency judgment.

If you have little money, apply for legal aid (apoio judiciário) through Social Security. It can waive or spread court fees and pay for a lawyer. EU citizens, and other foreigners with a valid residence permit in an EU country, can apply. Social Security has 30 days to decide; if it does not, the aid counts as granted. See Applying for Legal Aid in Portugal.

The step before insolvency

There is also a route that avoids an insolvency declaration: the special procedure for a payment agreement (processo especial para acordo de pagamento). It is for people who do not run a business and who are in serious difficulty paying on time, or close to insolvency.

  1. You and at least one creditor sign and date a written statement that you want to negotiate.
  2. You file it at the court that would deal with your insolvency, with a list of all debt collection cases against you, your income tax return, and proof of your job or unemployment.
  3. The judge immediately appoints a provisional administrator.
  4. You write to every other creditor by registered letter, inviting them to join.

The administrator's fee is your cost, unless you have legal aid that waives court fees. This route needs at least one willing creditor. It ends in an agreement, not a discharge.

If your debts are mainly to banks, the Bank Customer Support Network (RACE) can help for free. Its accredited bodies explain your rights and help you assess the bank's proposals. They cannot negotiate for you.

Key points

  • Ask for the discharge in your first filing, or within 10 days of being served. If you file a payment plan, ask for the discharge as a fallback in the same filing.
  • Check whether you fit the small-debtor route. An approved payment plan is not published or registered.
  • Do not wait for years. A delay of more than six months that harms creditors can block the discharge.
  • Expect three years on a modest budget. The most you can keep is three times the minimum wage, and usually less.
  • Report changes of address or job within 10 days, and pay creditors only through the trustee.
  • If your debts are mostly tax and social security, get advice first. The discharge does not cover them.

This guide is general information, not legal advice. Insolvency has strict deadlines; speak to a lawyer, or apply for legal aid, before you file or as soon as you are served.

Sources

This guide is written from official sources and, where relevant, organisations' own websites.

Last verified October 2026. Rules and fees change; check the official source before acting.

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