Bankruptcy: A Possible Solution In a Moment of Crisis
SAN JUAN – For many, the word bankruptcy has negative connotations. However, in moments of crisis, some find the mechanism to be a good alternative.
The island’s economic situation has left some drivers unable to pay their traffic fines, barring them from renewing their driver’s license or the vehicle’s compulsory insurance and smog regulation certification. But all is not lost.
Bankruptcy attorney Félix Zeno Gloró spoke with Caribbean Business to explain the legal implications when confronted with such a situation.
“Bankruptcy laws treat civil fines as debts. As a consequence, the positive effect is that, since these are fines, a benefit comes into effect that does not allow the state to continue collection efforts. When we refer to collection efforts, we are referring to the denial of license renewals or vehicle inspection sticker. Therefore, when declaring bankruptcy, one should go with the supporting documents, a list of creditors, among them the traffic fine debt, whether they be municipal or state, in order to renew the driver’s license or the vehicle registration sticker. That is one of the major collateral benefits of the Bankruptcy Law,” the lawyer said.
Zeno Gloró explained that the legal recourse is not about whether a person is responsible or irresponsible, but that the Bankruptcy Law’s purpose is to help those who have financial problems. He added that the mechanism should be observed from a fair perspective, considering that traffic fines are only one of the debts a person may have besides personal loans, credit cards, car loans, mortgages and others.
“It is a way to reorganize yourself. We live in a capitalist system that provides opportunities for everyone to strive for their maximum, but not everyone can achieve that maximum and this law serves as an escape valve so people can again be productive in the society’s economy. There are people who need a driver’s license to work, and their employer can even ask for their license, and if they don’t have it that person can lose their job. I’ve had various cases where people are desperate because their employer has given them an ultimatum that if they don’t have their driver’s license in two weeks they could lose their job because it is necessary that they be on the road, or they drive a truck,” the lawyer added.
Another benefit to the Bankruptcy Law is it allows debts to be paid little by little, through a payment plan. In this case, the debtor has to propose in bankruptcy court how creditors will be paid. The court initiates a restructuring process in which all interested parties may participate.
“The biggest benefit is the person does not have to go to the creditors to see if they are willing to accept a payment plan. With bankruptcy, the debtor is who first proposes to the court and creditors what payment plan will be used in order for debtors to lift themselves up economically,” he continued.
Zeno Gloró also spoke about a new law that will soon be coming into effect.
“A new law that deals with AutoExpreso [toll] fines, where if the person has $500 in fines, their license can be taken away, they can revoke it. It is dangerous. I know people who have had much more in fines and in some cases didn’t apply, but one must be careful as the new law comes into effect on August 1. However, the Transportation & Public Works Department cannot revoke [the driver’s license] if bankruptcy is declared before that. Revoking a license after one has declared bankruptcy implies that a new effort to collect is being carried out, and that is not allowed under the bankruptcy law,” he concluded.