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About Bankruptcy Law in San Juan, Puerto Rico

Bankruptcy law in San Juan, Puerto Rico provides individuals and businesses with a legal mechanism to address overwhelming debt. Guided by both federal bankruptcy laws and specific local statutes, individuals can find solutions tailored to alleviate financial distress. Bankruptcy can result in the discharge of debts or the establishment of a manageable repayment plan, offering a path to financial recovery. It's noteworthy that Puerto Rico, while subject to U.S. bankruptcy laws, has its distinct aspects due to its unique status as a U.S. territory.

Why You May Need a Lawyer

Handling bankruptcy involves intricate legal processes, and timely, informed decisions can significantly impact the outcome. Here are common situations where legal assistance may be beneficial:

• Complex Debt Structures: When you have various types of debts, such as secured and unsecured debts, navigating through bankruptcy can be complicated requiring tailored legal strategies.
• Business Bankruptcy: If your business is facing insolvency, a lawyer can help determine the most suitable type of bankruptcy and facilitate a plan to protect personal assets.
• Asset Protection: Understanding what assets are exempt can be complex, and legal advice ensures that you maximize your exemptions under local laws.
• Foreclosure and Repossession: A lawyer can assist in halting foreclosure or repossession proceedings, potentially saving your home or essential assets.
• Creditors' Harassment: Legal intervention can provide immediate relief from relentless creditors' calls and letters through the automatic stay provision in bankruptcy law.

Local Laws Overview

Pursuant to Puerto Rican law, the applicability of Federal Bankruptcy Code provides a clear framework which is enriched by specific local statutes, affecting both individuals and businesses:

• Chapter 7 Bankruptcy: Often termed liquidation bankruptcy, this is facilitated for the discharge of unsecured debts, providing individuals with a fresh start.
• Chapter 13 Bankruptcy: Known as reorganization bankruptcy, it's suited for individuals with a regular income seeking to pay off arrears over a period, typically three to five years.
• Chapter 11 Bankruptcy: Although mostly for businesses, this process can also be used by individuals, especially those with substantial debts, allowing restructuring and continued operation.
• Exemption Laws: Puerto Rico offers federal bankruptcy exemptions, but specific local exemptions can affect what property may be retained post-bankruptcy.

Frequently Asked Questions

What types of bankruptcy can I file in Puerto Rico?

In Puerto Rico, individuals typically file under Chapter 7 or Chapter 13, while businesses often file under Chapter 11. Each type has specific requirements and benefits.

Does Puerto Rico follow federal bankruptcy laws?

Yes, Puerto Rico is governed by federal bankruptcy laws, but certain aspects, such as exemptions, are influenced by local laws specific to the territory.

Does filing for bankruptcy stop creditors from contacting me?

Yes, an automatic stay is issued immediately upon filing for bankruptcy, which stops creditors from all collection activities including lawsuits and contact attempts.

Can I keep my home if I file for bankruptcy?

While filing for bankruptcy can halt foreclosure, keeping your home depends on numerous factors including your ability to pay mortgage arrears under a Chapter 13 plan or claiming exemptions under Chapter 7.

How long does the bankruptcy process take?

Chapter 7 bankruptcy may take a few months to complete, whereas Chapter 13 extends over three to five years for plan completion.

How will bankruptcy affect my credit score?

Bankruptcy will stay on your credit report for 7 to 10 years, but its impact diminishes over time, and many rebuild their credit rating significantly within a few years post-discharge.

Is debt counseling required before filing for bankruptcy?

Yes, individuals must complete a pre-bankruptcy credit counseling session and a post-filing debtor education course to receive a discharge.

What debts are not dischargeable through bankruptcy in Puerto Rico?

Debts such as alimony, child support, certain taxes, and student loans are typically non-dischargeable unless specific conditions are met.

What happens to my car loan when I file for bankruptcy?

If your car loan is current and you can continue payments, you may retain the vehicle through reaffirmation agreements or Chapter 13 payment plans.

Can I choose which debts to include in my bankruptcy filing?

No, you must list all debts when filing for bankruptcy, but you can choose to pay certain debts voluntarily post-discharge that are not affected by the application process.

Additional Resources

For more assistance, consider the following resources:

• U.S. Bankruptcy Court for the District of Puerto Rico: Provides court information, forms, and local rules.
• Legal Services of Puerto Rico: Offers legal aid and assistance to low-income individuals navigating bankruptcy.
• Puerto Rico Bankruptcy Clinic: Offers pro bono consultations and guidance for those considering bankruptcy.
• National Foundation for Credit Counseling (NFCC): Available for pre-bankruptcy counseling services.

Next Steps

If you're contemplating bankruptcy, here are some advisable steps:

• Consult with a Bankruptcy Attorney: Seek a knowledgeable attorney with experience in Puerto Rican bankruptcy law.
• Complete Credit Counseling: Enroll in an approved credit counseling course to fulfill legal prerequisites before filing.
• Gather Financial Documents: Assemble relevant paperwork such as income statements, debt ledgers, and asset inventories.
• Evaluate Alternatives: Consider debt consolidation or negotiation of more favorable payment terms with creditors as potential alternatives.
• Prepare and File Your Petition: Work with your attorney to draft and file your bankruptcy petition along with required forms in the court.

Ultimately, understanding bankruptcy processes and getting comprehensive legal guidance can empower effective financial decision-making tailored to your unique circumstances.