download…because Rico means “rich” in Spanish. Currently, the island territory is paying upwards of 70% of it’s economic output to servicing debt. Ouch. While some options to negotiate with creditors remain, Puerto Rico is not permitted, by law, to file for bankruptcy — which would be a Chapter 9, like Detroit — due to its status as a territory and not an independent sovereign/municipality. Bankruptcy in this context could be very helpful, if only as a means of leverage in negotiations with creditors. Indeed, I believe that the threat of bankruptcy will likely lead to a win-win situation: a win for Puerto Rico in that it would be allowed to mitigate its debt issues, at least in the short term; and a win for creditors in that they’d likely not have to swallow as poison a pill as might be forced upon them through a Chapter 9 filing. Hopefully, Congress will act. It seems a bit overlord-like to, at once, keep Puerto Rico as a territory (neither a state nor an independent nation-state) while not offering it some of the most basic protections afforded all Americans. Consider, for instance, that one doesn’t even need to be a US citizen to file a Chapter 7, as it is the debt (i.e., whether it is owed to an American entity) that defines whether jurisdiction, and the ultimate discharge, is applicable. So, buenas suerte, amigos. I hope you become empowered with the right to file.

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