Total Tax Resistance by Making Yourself Bankrupt

In earlier Picket Line entries, I’ve attempted to translate sections from the latest edition of the Spanish Handbook of Economic Disobedience (see , , , and ).

Today I’ll continue:

Total tax resistance by making yourself bankrupt

This action consists of stopping all payment of personal income tax, VAT, and/or all those that you can, with prior action generating a situation of irrevocable insolvency. Taking into account that not paying taxes is only a criminal offense starting at €120,000 per year, there is much margin for disobedience without the risk of criminal charges and for dropping out of the system, supporting a widespread and massive process of social self-management.

Additionally, through your personal action, you can support other businesses and cooperatives that are not insolvent, generating receipts to help them balance their accounts.

From tax resistance to fiscal autonomy

Some of the mechanisms that we provide on this page resemble the tricks also used by people for selfish ends of dubious ethics. If these also form part of our proposals, this is because the depth of social autonomy that we propose will require a great deal of resources in order to make it happen, which can be generated in part by the ability to work and the generosity of many people; so long as the minimum necessary economic resources go along with it to make it possible.

We mean by fiscal autonomy all of these paths of redirection that make sure taxation remains in projects that will really result in benefits for the people. This is to say that the part of the work that each person is responsible to contribute to the common good can be directed to new public services that really prioritize the basic needs of people in the highest scale of priorities.

For this reason, in the face of the squandering of our resources on the part of the State, it is a priority and nothing less than essential to create ever more massive dynamics of civil disobedience and to redirect our resources for popular, grassroots self-organization.

A difference from last year, when during the organizing of the Handbook we collected a list of the projects that were registered to receive funds from tax resistance, this year the lists are prepared in a decentralized way in the various territories, so that in this edition that you are reading, you should find an appendix with those projects from the territory where you are. If not, you can look on the web where we will publish a list of projects from all of the territories.

How we will organize if we are holders of unpayable mortgages

In recent decades, the necessities of the real estate market and the coverage of the neoliberal propaganda apparatus have generated the false necessity to embrace (private) homeownership. This has led millions of people signing mortgage contracts that, surely, not even their heirs can assume. Meanwhile, banks, housing, construction, real estate, and vultures in general, saw their businesses flourish, but the lives of millions of families withered when the terms for making the mortgage payments were not longer sufficient. This is the harsh reality in which the weakest level in the social pyramid is steeped today, now. The question is: What can we do to stop the forceful expropriation of the legitimate right to housing?

The commendable work of the Platforms of People Affected by Mortgages throughout the region has demonstrated that we can defend the right to housing in the streets and through various forms of social pressure, greatly reducing the number of people evicted from their homes.

From there, and with the base of disobedience, we propose extending the lines of action that permit us to self-manage the right of housing for the long term.

Strategies to impede the legal process

Various Platforms of People Affected by Mortgages suggest that when a notice of unpaid mortgage arrives, demand free legal aid. Whether it is granted or not, the very process of making the claim extends the interval between the notice and the auction. If it is granted, it will be important to count on trusted lawyers who provide free help in order to ensure that the rights of the debtor are properly defended.

Furthermore, if we are aware that in the short term we cannot afford to pay our mortgage, we can rent it at a low price to someone trustworthy and who can make use of it, integrating a network of cross-linked rentals. By renting, we can block the evictions from properties for at least five years. Caution: there has been a lot voiced about how only a nominal rent would be sufficient to keep the house. In light of this it would be wise, since there is the legal concept of “legally fraudulent contract” issued at the whim of a judge, which could lead to an eviction order. Given this, it is important:

  1. That the new tenants inhabit the house.
  2. That the price is credible, even though it be low in comparison to others.
  3. That the economic transactions of rent actually take place and can be demonstrated.
  4. That the direct deposit of receipts and so forth is changed.

In other words, you have to prepare in the face of the law with complete thoroughness, because what you have to do is to demonstrate to the judge that a true contract is at issue.

See article 14 of the Tenancies Act concerning “Transfer of leased housing.”

As much as some judges, leaning in favor of the banking sector, argue that the Mortgage Law or even the mortgage deed itself limits the right to rent mortgaged homes, there are numerous rulings that demonstrate that the Tenancies Act must prevail during the first five years of the contract, since it forms part of the guarantee of the basic right of a tenant.

You have to take into account also what it says in the Civil Procedure Act with concern to renting a foreclosed property: “In the mortgage process there is one event concerning possession and that is when the judge evaluates all of the details of the contract in order to adjudicate whether it must or must not be respected.”

Following this are excerpts from Article 661 of the Civil Procedure Act that I couldn’t be bothered to translate but I assume continue to back up the point that renters of a property that is seized from its owner via foreclosure are not thereby automatically evicted.

A subsequent paragraph recommends that people begin the process of renting out their soon-to-be-foreclosed homes quickly when it becomes clear that they will not be able to keep up with the payments, and that they file official paperwork about the rental right away so it goes on record before the foreclosure process gets started.

Social housing cooperatives as a tool for our self-management

As we anticipate foreclosures and eviction attempts, we can respond by going on the offensive, creating cooperative social housing.

In order to convert “social renting” [a government program that helps people who have been foreclosed on to move into rental flats] into an option that fights in an organized way the problem of unaffordable mortgages, the best option is to create a collective tool that allows for putting into place social housing cooperatives that lease mortgaged homes and thereby assure social housing to the debtors who cannot continue paying their mortgages. This is the case with CIC-HS, the social housing cooperative Cooperativa Integral Catalana that you can find at, and that could be a model to follow in other areas.

This cooperative also has already obtained in the past year a judgment declaring that its social renting is legitimate because it has the social purpose of obtaining affordable housing for its members, in spite of the fact that it concerned Roig 21, a residential block that the cooperative rented less than a month before the auction date. This precedent demonstrates the viability of a cooperativist strategy that has broad mandate to extend between people with difficulty of access to housing and especially between people with mortgages.

The basic operation of a social housing cooperative dedicated to providing an alternative to people with mortgages is as follows: the owner who cannot continue paying the mortgage will rent the flat for five years to the cooperative and become a partner with it. This will take care of assigning another rental unit from the stock of rental housing. Rentals will have a social price. Likewise, there will be a waiting list to create social rentals with the transfer of use from future interested members. A cooperative like this can aspire to generate a social fleet of homes to offer its members under a transfer of use.

Debts and bankruptcy

Currently there are many people in bankruptcy, some of them have become so for ideological motives and many others in more involuntary ways.

At a time when millions of people are debtors, by means of our union for debtors we can recover the freedom to stop being looked down upon.

The economic power manipulates it so that people in debt are to be seen as social outcasts. Instead, debtors, even should it follow from making poor money management decisions, stop being part of the consumerist system and that gives them an opportunity to learn to live in another way.

In fact, many of us have decided on bankruptcy as a useful tool for our daily lives. The combination of the antidemocratic practice of political power and the current legislation makes bankrupt people able to enjoy many more civil liberties than the others; the State can punish us with fines but has no tools to make us pay them.

It is for this reason that since the publication We Can ( we began creating tools for making contact with all the people who are in bankruptcy or who want to get there. And to use this new freedom that we enjoy for the benefit of society and each other.

Bankrupt people can organize ourselves in order to take collective action without suffering any economic reprisals on the part of the State.

Our freedom permits us to take civil disobedience actions or to carry out tasks that for our more creditworthy comrades would be much more risky: refusal to pay transit fares, distribution of bulletins from social collectives, sticking your neck out at assemblies, taking positions of responsibility in collectives, or making invoices for self-managed cooperatives with a VAT less than €120,000 in order to avoid having to pay VAT.

So we present here bankruptcy as a tool for social transformation. If you want to participate, we will enumerate what you need to know:

How do you go bankrupt?

From the moment you decide to stop struggling with your debts and mortgages, it is advisable to make a review of the past work of study and more specific documentation of your particular case with the intention of anticipating the subsequent events that will be triggered and protecting yourself from possible seizures.

With this section we will make this job easier by providing some general applicable guidelines, being careful in order to minimize any eventuality.

It is important to be conscious of the personal situation in which you find yourself, with all of the particulars that will shape the process.

For this reason, before you give up struggling with your debts and mortgages, the main concern will be in letting go of present and future assets.

The equation is very simple: If you don’t possess anything = They cannot seize anything.

You do not have to make any declaration of bankruptcy before a State institution, but simply put into practice certain measures: do not have real estate or vehicles registered in your name.

Do not have bank accounts in your name, although you can be a co-signer. Do not have traded funds or shares of stock. Do not have a regular salary, pension, unemployment or any similar official income (except that which is below the minimum wage that is allowed, as will be explained below).

Also, being in debt is not listed as an offense in the Penal Code. It is only a breach of contract that depends on the Civil Code. You must forget the association of trials with criminals. You are no criminal. You are free to travel when and where you want.

Stopping the payment to creditors only shuts the door to asking for new loans. It can lead to a seizure of bank accounts or salary and of present and future assets, but the law has provided that some assets and income are unseizable.

There are many personal situations that make bankruptcy difficult in the short term, for instance perhaps the part about not having a salary, a pension, or any other State payment, is the most difficult hurdle for bankruptcy. Even so, the seizure of a part of the salary can leave more on account of continuing paying debts and fines.

How much of my salary can they seize?
(Also for pensioners, self-employed, those on leave, and the unemployed)

In the case where your salary is below the minimum wage, it cannot be seized. For the minimum is €645.30 (it rose a scant 0.6% from ). Amounts above this can be seized according to the levels defined in article 592 of the Civil Procedure Act, which will usually be much less than what you pay to banks.

And furthermore, in the case where the debt is for an unpaid mortgage, the minimum unseizable stays at €967.95 under the new law of .

Other things to consider before stopping payment

A default can be managed ethically. You first pay your friends if you owe them money and your suppliers that are small and mid-sized businesses, stopping your payment of taxes to the State and, above all, to the multinationals and the banks.

If you have any property that you need to get rid of, do this before you begin to default on a debt, or as soon as possible once you decide you are not going to pay more fines. Finally, before they can seize them you can sell any shares, take the money, and close your accounts.

In this section you should take into account that there is a crime of criminal bankruptcy (popularly called ditching goods), and for this reason it is important how and when you get rid of your property. If you do so at the time you have a creditor’s claim in hand, you risk being charged criminally. Unless you do so by means of a sale at market price — in which case we are in our rights of managing our property — or by using it as social capital for a cooperative — in which case it will be difficult for the creditor, as the social capital of a cooperative is not seizable for the debts of one of the partners, and at the same time, the certificate from the allocation of social capital will demonstrate that there is still a proprietary relationship between the person and the property, such that he cannot be accused of criminal bankruptcy.

Other personal advice when facing the impossibility of paying debts

  • If you are no longer able, immediately stop paying credit cards and other such accounts; prioritize your health and the basic needs of your family before paying debts to the banks.
  • If you are a married couple and one or both have debts that you are going to stop paying, it is important to be in a system of separate property, because they will seize from both accounts and, also, will add both debts in order to calculare the amount to seize. Separate property can be done by mutual agreement before a notary and may not cost more than €150.
  • Before selling a car or putting it under another name so that it is not seized, check with the department of motor vehicles to see if there are any blocks on the title. Cars with blocks on the title cannot be sold without canceling the debt.
  • Pay no mind to the telephone calls or letters that will come in the future, no matter how threatening they are.
  • If they notify your neighbors, you can report them for violating the Private Data Protection Act.
  • As soon as possible, adopt a new financial life. Without bank loans, credit cards, or purchases on installment. You can live well, we can assure you of that.