Puerto Rico’s recent financial crisis has sparked a heated debate among Congress. More than $72 billion in debt, the island territory is ready to declare bankruptcy. However, our nation’s bankruptcy code currently does not allow Puerto Rico access to do so. In a recent statement, Puerto Rico’s governor Garcia Padilla stated that the commonwealth’s debt is far too much for them to handle and now Congress is under pressure to make a decision.
Lawmakers have been considering whether they should implement a legislative solution to allow Puerto Rico to declare bankruptcy. If Congress passes a new law to remedy this, advocates believe it will finally resolve a technical oversight from a 1984 update to the nation’s bankruptcy law. Apparently the update inadvertently excluded Puerto Rico. Since the law says nothing about Puerto Rico, it is currently unable to receive aid. Even though Puerto Rico is supposed to have the same ability as the states, lawmakers called it an “error.”
Puerto Rico’s Resident Commissioner Pedro Pierluisi (D), is working to build support for legislation, as well as Senators Chuck Schumer (D-N.Y.) and Richard Blumenthal (D-Conn.), who are also working to build support for similar legislation in the Senate. Former Florida Governor Jeb Bush (R) expressed support for the bankruptcy proposal when he visited Puerto Rico in April. Hillary Clinton also expressed her support for allowing Puerto Rico to declare bankruptcy. At this time, the path ahead is unclear but Pierluisi states that he hopes to see the bill move before Sept. 1, 2015.
Meanwhile, many investors oppose the possible change, fearing that they too might go bankrupt if the law does pass. Skeptics say that the law would put billions of investors’ dollars at risk across the country. Even with a granted bankruptcy, many feel this will not solve all of Puerto Rico’s financial problems. Puerto Rico’s financial troubles have been long standing, since the territory was hit hard by the global financial collapse of 2007. Since then, many Puerto Ricans have moved to the U.S. mainland, namely Florida, to seek better opportunities.
More than 2 million Puerto Ricans reside in Florida. These numbers continue to grow as Puerto Rico looses approximately 1% of its population every year as thousands migrate to Florida’s more robust economy. South Florida is one of Puerto Rico’s largest trade partners. As a result, millions of Puerto Ricans living and working in Florida are an important part of the economy on the island. Unfortunately, if Puerto Rico defaults, Florida’s economy will certainly be affected.
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
Sources:
http://thehill.com/policy/finance/246820-puerto-rican-debt-crisis-hits-congress