I myself am curious how this works in Iceland and parts of Europe.  From what I gathered from Hudson's talk this was the case in the USA until the depression. My surmise is that one could just walk away, but any assets or income remain vulnerable to attachment. Hudson noted that the fact that the home was worth substantially less than the value of the loan represents a failure on the part of the bank (and the regulatory authorities) more than on the part of the borrower in the case of bubbles. Do you know what is the law in Spain?

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."