Puerto Rico Debt Relief

In a Nutshell

With a population of over three million, Puerto Rico is the biggest U.S. Territory and boasts more residents than some states. Home to lush tropical landscapes and a beautiful coastline, Puerto Rico is also a popular tourist destination. 

Despite the inviting tropical environment, the island’s poverty rate far exceeds the national average, with 40% of the population living below the poverty line. Puerto Rico is still grappling with a debt crisis worth billions in public and private funds that stifled economic progress for years. 

For those calling the island home, it can be difficult to rise above the financial strain of living with a low-income. Let the experts at TurboDebt help you explore the best options available today with a free consultation. Read on to get the full picture of debt in Puerto Rico and why many residents are in need of debt relief. 

An Economic Overview of Puerto Rico

Puerto Rico is known for its breathtaking topography, rainforests, waterfalls, beaches, and mountains. The island has also suffered physical and financial hardship from recent hurricanes, including Irma and Maria.

Puerto Rico's economy includes a diverse industrial sector that has surpassed agriculture as the primary source of economic activity and income. U.S. firms and tourism are both important sources of income for Puerto Rico and are a large part of its economic growth.

However, in the wake of an inflationary economy, many island residents find themselves struggling with unsecured debts from credit cards, medical bills, and personal loans. Thankfully, there are debt relief solutions available to Puerto Rico residents. In this article, we share more about Puerto Rico's debt relief options and how they work.

How Does Debt Relief Work in Puerto Rico?

Puerto Rico debt relief works by addressing an individual’s unique financial situation. This can include several different strategies aimed at reducing payment amounts, pausing penalty fees, extending the length of repayment terms, or a combination of these factors.

Debt and Finance Statistics Specific to Puerto Rico

Here are some of the most relevant statistics related to Puerto Rico’s debt and economic conditions: 

Average Consumer Debt 

The average consumer debt in the state of Puerto Rico includes mortgage, credit card, student loan, and auto loan debts. Many Puerto Ricans struggle with financial stability, with over a million people living below the federal poverty line.

Credit Card Debt

Credit card debt continues to cause financial burdens for residents of Puerto Rico. The Consumer Financial Protection Bureau (CFPB) estimates that 22% of Puerto Ricans pay late fees on credit cards.

Once you get into a cycle of late payments, it’s hard to escape debt as your balance and interest compounds, making it hard for many Puerto Ricans to pay off high credit card balances. 

Mortgage Debt

Puerto Ricans have seen home values and interest rates rise just like the rest of the United States. The U.S. Census Bureau lists the average home value as $124,600. While this may seem reasonable, the poverty rate in Puerto Rico makes it difficult for many to afford a home. 

Student Loan Debt

Residents of Puerto Rico who’ve pursued higher education owe an average student loan debt of $31,503.

Household Debt

In Puerto Rico, household debt is influenced mainly by mortgage payments, credit card debt, and auto loans. Due to the economic changes after the pandemic, Puerto Rico has seen household debt increase.

According to Federal Reserve data, 11 counties in Puerto Rico were named on the list of distressed or underserved middle-income non-metro areas across the U.S. and territories. 

Bankruptcy

In 2023, Puerto Rico residents filed 4,567 bankruptcy petitions. Most individuals filed for either Chapter 7 or 13 bankruptcy to absolve or restructure debts through the court system. 

Average Income and Employment

According to the U.S. Census, Puerto Rico’s median household income is $25,096.This is a staggering difference from the rest of the U.S., which sits at $78,538.

Puerto Rico’s unemployment rate remains high, offering further proof of the financial struggles so many face across the island. In November of 2024, Puerto Rico's unemployment was 5.4%, well above the national rate of 4.2%. 

Key industries in Puerto Rico include manufacturing of pharmaceuticals, textiles, petrochemicals, and electronics. Other common industries are services, such as finance, insurance, real estate, and tourism.

Credit Scores

As an unincorporated part of the United States, Puerto Rico is subject to American financial requirements and trends from Wall Street in New York, including credit scores. Residents of Puerto Rico have the same credit opportunities as those on the mainland. The average credit score in Puerto Rico is 695 according to Equifax. 

This score falls into the "good" category, which may help residents qualify for better interest rates and more opportunities for lines of credit. 

Banking and Tax Info

There are currently five banking institutions operating branches throughout Puerto Rico. Each bank has a number of features and services to serve the Puerto Rican community.

Puerto Rico has a well-developed banking system that is regulated by the Office of the Commissioner of Financial Institutions. The office is responsible for the supervision and examination of all banks, credit unions, and other financial institutions operating in the country.

The banking system of Puerto Rico includes a few large banks, including FirstBank, Banco Popular, and Santander Bank, as well as a number of smaller banks, credit unions, and other financial institutions that provide specialized services and cater to specific market segments.

Puerto Rican residents are taxed on their worldwide income, no matter where their income is from. Puerto Rican non-residents are only taxed in Puerto Rico on their Puerto Rico-source income. Income for services performed is sourced to Puerto Rico based on where the services are performed.

The current income tax rate in Puerto Rico follows these guidelines:

• Income between $9,000-$25,000 has a 7% tax rate of income over $9,000.
• Income between $25,000-$41,500 has a 14% tax rate of income over $25,000.
• Income between $41,500-$61,500 has a 25% tax rate of income over $41,500.
• Income over $61,500 has a 33% tax rate of income over $61,500.

How TurboDebt Helped Puerto Rico Get Debt Relief

TurboDebt is a debt relief company that provides Puerto Rican residents with a fresh financial start through our effective debt relief program.

In 2023, we helped 170 total clients in Puerto Rico, enrolling 59 in our debt relief program. Residents enrolled a total debt of $1,587,842, with an average client debt of $26,913.

Top Types of Debt To Get Relief From in Puerto Rico

Puerto Rico residents with growing debts can enroll with TurboDebt to find debt relief through settlement and advising services. Read on to learn about the top types of debt to enroll in a debt relief program:

Credit Card Debt 

High interest rates and late payment fees have caused financial difficulties for many Puerto Rico residents, leading many to search for debt relief options.

Increased rates have made it difficult for Puerto Rican residents to manage their credit card debt. With high APRs of up to 30%, residents of Puerto Rico have been struggling with their debt, which continues to accumulate. Residents are experiencing many past-due penalty fees and are struggling to make on-time monthly payments. 

TurboDebt is focused on helping people in Puerto Rico with their credit card debt. We want to assist residents in achieving a debt-free life. Enrolling in our debt relief program can help residents of Puerto Rico find freedom from credit card debt in as little as two to four years.

Divorce Debt 

In Puerto Rico, a divorce action only involves the dissolution of the marital union. Therefore, a divorce case in Puerto Rico ends the marriage but does not involve other areas, such as the division of marital assets, divorce debts, and child custody.

To determine the division of divorce debts in Puerto Rico, parties must file another case. In the new case, both assets and debts are divided. The case involves a type of legal entity that is not used often in the United States, called the “Sociedad de Bienes Gananciales.” All the assets and liabilities are held in this entity during the divorce and the division process until the court dissolves it.

You may end up with divorce debt if the court decides to divide your partner’s personal loans or if you have taken out debts together. During this process, you may want to get legal advice about the factors involved in the division of marital debt. 

By enrolling in a TurboDebt debt settlement plan, you can tackle your divorce debts. This divorce debt relief option offers individuals a chance to get help and move on.

Business Debt

There are many businesses in Puerto Rico, thanks to the island’s tax policies for relocating businesses. In Puerto Rico, taxes are kept low for certain businesses and individuals. Under the Act 60 Export Services Tax Incentive, a qualified new business enjoys a corporate tax rate of only 4%, which is lower than the 21% corporate tax rate on the mainland.

With plenty of reasons to open a business in Puerto Rico, many owners find themselves with business debt. If you have business debt in Puerto Rico, you can find relief through TurboDebt’s relief programs.

At TurboDebt, we help Puerto Rican business owners address their debt through advising and money management and by helping individuals choose a debt relief plan.

Medical Debt

In Puerto Rico, residents can hold insurance or receive medical care through the government-run program called Vital, which provides insurance and healthcare for those who cannot afford it. With 7.1% of the population lacking health insurance, medical debt is an unfortunate reality for many.

Residents of Puerto Rico who are not on the government’s Vital program are responsible for their own medical costs. When paying for insurance and healthcare on their own, many people find themselves with growing medical debt. If medical debt is left unpaid, it continues to accumulate and cause a big financial strain. 

At TurboDebt, we have a team of experts that can help you with your medical debt. By enrolling in a debt settlement program, you could receive an average savings of up to 50% of your total debt before fees.

Homeowner Debt 

As with the states on the Mainland, Puerto Rico’s housing market has been impacted by the pandemic. Housing prices and interest rates continue to rise while homeowners struggle to make their house payments due to rising economic costs. Many homeowners are struggling with debts related to homes, including costs of building materials, house payments, loans, and more.

Let TurboDebt help you make a plan to overcome homeowner debt so you can start rebuilding your wealth!

Retirement Debt

Puerto Rico residents and retiree transplants to the island may find themselves with retirement debt once they start living on a fixed income. This occurs when their cost of living after retirement is too high, and they are unable to meet financial obligations, causing them to go into retirement debt. This can also be due to pension liabilities and mismanaged hedge funds.

Retirement in Puerto Rico should be a time to relax and enjoy yourself. However, if you find yourself in debt after retirement, it can be hard to settle down and stop struggling. Fortunately, TurboDebt has a team of experts who can help retirees get on track with their finances in order to address retirement debt. When you work with TurboDebt, you can find relief, budget your income, and free yourself to enjoy retirement.

Puerto Rico Debt Relief Options

The following debt relief options available in Puerto Rico are among the most popular and effective solutions for paying off debt:

Credit Counseling

Credit counseling gives you advice and guidance about credit, finances, and debt management. The goal is to give you the information you need to make better decisions about your finances and debt, as well as to find a debt management program that can help you with your financial situation.  With credit counseling, you can receive help negotiating a pause on penalty fees, lower interest rates, and lower monthly payments.

Last year, the demand for credit counseling rose 167% in Puerto Rico, showing the increased need for debt relief options across the island. 

Debt Management Programs

Debt management programs are typically offered by credit counseling organizations. Once you enroll in a program, credit counselors will recommend the best course of action for you. Often, the most effective programs involve negotiating for reduced interest rates or waived fees on unsecured debts.

This debt relief option can be helpful for high-interest credit card debts because these programs lower interest rates and create one monthly payment for those who have multiple credit cards. To qualify, you’re usually required to close your existing credit cards to avoid accruing new debt, make consistent monthly payments to a savings account, and commit to a repayment plan lasting between 3 to 5 years.

Debt Consolidation Loans 

With debt consolidation, you take a large loan to pay off your existing debts in a single lump sum payment, leaving you with only one debt. Consolidating debts into one and clearing your many debts helps your credit and saves you money by eliminating multiple interest fees, reducing monthly payments, and lowering interest rates. 

However, it’s important to make sure that your repayment plan doesn’t have high interest fees as a result of an extended repayment period.

Debt Settlement 

Debt settlement is a partial debt cancellation on current debt balances. This debt relief option works best for Puerto Rican residents who are having financial difficulties and have fallen behind on their monthly payments. 

When you choose this option, you agree to make a lump sum payment to debt collectors or lenders as a way of settling your debt. The amount agreed upon for settlement can often be around half of the existing balance. After you’ve paid the lump sum, your debt is eliminated.

Bankruptcy 

Filing for bankruptcy is often a final option for Puerto Ricans seeking debt relief. Bankruptcy’s long impact gives most debtors pause, as it affects their credit report for 7 to 10 years, making it difficult to obtain new loans. Still, filing for bankruptcy may be the best option because it can eliminate debt or create a reasonable repayment plan.

There are three types of bankruptcies to consider: Chapters 7, 11, and 13. Chapter 7 bankruptcies settle unsecured debt by liquidating your nonexempt properties and paying off debt balances. Chapter 11 bankruptcy restructures repayment plans without affecting business operations and is available for businesses with too much debt.

Chapter 13 bankruptcies work best for businesses and individuals who can manage debt payments with a consistent monthly income. Their assets and nonexempt properties aren’t liquidated if they stick to the repayment plan.

Debt Forgiveness 

Debt forgiveness programs are offered by federal and state governments as an option for debt relief. These programs can eliminate an individual’s debt completely if they meet specific requirements. Available debt forgiveness programs include federal loans, student loans, teacher loans, and public service loans.

Debt and Financial Hardship Resources

Residents of Puerto Rico who are experiencing financial difficulties may need assistance. Help available on the island includes homeless assistance, medical care, transportation assistance, child care, and food assistance.

Temporary Assistance Programs 

The TANF is a cash assistance program available to low-income families for up to 60 months. The program is created to help families build a safe and healthy home with all essential needs met. It helps eligible people avoid homelessness and take care of their families. Although Puerto Rico is unincorporated, it still receives a TANF grant in order to help those in need on the island.

State Health and Human Services

In Puerto Rico, the Department of Health provides many services for people in need, such as:

• Medicaid, which offers medical insurance and healthcare to low-income families.
• Vital provides healthcare to low-income individuals and families in Puerto Rico.

Child Care

Puerto Rico Child Care provides assistance in paying for child care services.

Shelters for the Homeless

DRS provides help finding homeless shelters in Puerto Rico. In addition, HUD has resources for helping the homeless in the country.

Finding Debt Relief in Puerto Rico

If you’re a resident of Puerto Rico in need of debt relief, contact the experts at TurboDebt. We can help you determine the best program for your needs and ensure that you find relief while having peace of mind.

With so many options, doing your due diligence is essential when pursuing debt relief. Take the time to talk to our team and learn about our experience and what we can do for you.

Get started today with a free debt relief consultation and learn how TurboDebt can help you find financial relief in Puerto Rico.