Bankruptcy in Puerto Rico is a legal procedure through which some of the debts of an individual or a business are discharged (excused). You should not view bankruptcy as an opportunity to eliminate your debts just because you don't feel like paying them - it can be a long and difficult process. Bankruptcy is designed to be a last resort to prevent complete financial ruin, while allowing creditors to collect at least some of their debts in an orderly fashion. Filing for bankruptcy can have major negative effects on one's credit score, which will make it more difficult to get loans in the future.
Accordingly, if you are considering bankruptcy as an option, you need to thoroughly examine the costs and benefits. A good Puerto Rico bankruptcy attorney can advise you as to the pros and cons of bankruptcy, and give his or her expert opinion about whether or not bankruptcy is a good option, based on the facts of your individual case.
Types of Bankruptcy in Puerto Rico
Bankruptcy is governed by federal law, so the procedures in filing for bankruptcy in Puerto Rico will be the same as anywhere else in the United States. There are 2 basic types of bankruptcy that consumers typically use: Chapter 7, and Chapter 13, owing their names to where they are found in the U.S. Bankruptcy Code. Additionally, there is a form of bankruptcy typically used by businesses called Chapter 11. Chapter 11 is available to individuals, but it is rarely the best option for them.
In Puerto Rico, Chapter 7 bankruptcy is referred to as "liquidation." The court will conduct an accounting of all of the debtor's assets, and determine which ones should be sold to help pay off the debts. Many classes of property, such as homes and cars, are exempt from this requirement, and therefore don't have to be sold. Once all of the eligible property is sold off, and the proceeds given to the creditors, the rest of the debt is discharged. When Chapter 13 bankrutpcy is filed, the debt is reorganized instead of discharged. Essentially, the court, the debtor, and the creditors will work out a repayment plan that the debtor can manage, and will result in most of the debt being paid off, hopefully in a reasonable period of time.
Typically, Chapter 11 bankruptcy is used by businesses as opposed to individuals. Much like Chapter 13, Chapter 11 involves the reorganization, as opposed to discharge, of a debtor's obligations. However, it is up the to the debtor to come up with a repayment plan, and once this happens, the plan is submitted to the participating creditors, who must approve it by majority vote.
How Can a Puerto Rico Bankruptcy Lawyer Help?
Filing for bankruptcy is a very big decision, frought with risks. However, in some cases, the benefits might outweigh the costs. Because of this, it is important to seek the advice of a Puerto Rico bankruptcy attorney, who can advise you of the likely consequences of filing, and whether or not doing so is likely to benefit you.
Interesting Facts About Puerto Rico
The Commonwealth of Puerto Rico is a territory of the United States, located in the northeastern Caribbean. The islands were ceded to the United States in 1898, as an outcome of the Treaty of Paris. Although Puerto Rico is not a U.S. state, U.S. federal laws apply to Puerto Rican citizens, who were declared U.S. citizens in 1917.
Puerto Rico has a republican form of government similar to that of the U.S. with its three branches. Its capitol is located in San Juan, and is home to the Legislative Assembly. Puerto Rican law is a hybrid system of common law (similar to U.S. case law) and civil law (statutes created by legislature). Thus, lawyers in Puerto Rico must study and examine these two overlapping systems when assisting clients.
Puerto Rico's court system is composed of the Supreme Court of Puerto Rico, a Court of Appeals, and the Court of First Instance. Selected fundamental rights from the U.S. Constitution apply to Puerto Rican citizens. U.S. Supreme Court cases have commented on which other specific rights apply to the territory. For example, residents of Puerto Rico generally do not have the right to vote in U.S. presidential elections
Lawyers in Puerto Rico assist clients by providing a wide range of legal services. Puerto Rico lawyers are available to assist with legal issues that can be very unique to the area. Attorneys in Puerto Rico are also available for representation in court during lawsuits and other types of legal claims.