Q: If my home is declared my Homestead, will the home be exempted if I declare Bankruptcy in Puerto Rico?

A: The amount of the homestead exemption that you are entitled to claim varies from state to state. I'm a California attorney, but I looked it up on Google and it appears that you are entitled to an unlimited homestead exemption in Puerto Rico. However, before you proceed, you should consult a local bankruptcy attorney. Many offer free consultations.

A: As a debtor, you are the one who claims your exempt property; if anyone, including a bankruptcy trustee, objects, a written Objection must be filed, and you, as debtor, have the opportunity to respond, and thereafter, the Bankruptcy Judge will conduct a hearing on the Objecttion.

There is an interplay between State law (every State has its own set of exempt property, by statute), and the Bankruptcy Code, which has its own set of allowable (claimable) exemptions. In my State, a debtor can choose which set of exemptions apply, either State or Federal. Other States make that decision for the debtors, and some declare that only State law exemptions will apply, while others opt for the Bankruptcy exemptions.

If you are considering filing a bankruptcy case, Ms. Jarrett is correct, and you should consult with an experienced bankruptcy lawyer in your jurisdiction, and offer that lawyer your full financial circumstances to formulate his/her recommendations to you. There are non-lawyer "debt consolidation" companies out there, many heavily publicizing, but be leery. I have had many a client come to me after a disastrous experience. Remember, only a Bankruptcy Court can declare any of your debts to be discharged. Debt consolidators can and do only work by agreement with any creditors.

A: In Puerto Rico, declaring your home as a homestead may provide certain protections if you declare bankruptcy, but there are conditions and limits. The homestead exemption is meant to help you keep your primary residence, under specific circumstances, even when you're facing financial difficulties. It's important to know that this exemption has a cap, which means only a portion of your home's value may be protected from creditors.

When you file for bankruptcy, whether Chapter 7 or Chapter 13, the homestead exemption allows you to exempt a certain amount of equity in your home. This means if the equity in your home is less than the exemption limit, you may be able to keep your home. However, if your equity exceeds the allowed amount, the trustee can sell the home to pay creditors, although you would receive the exemption amount from the proceeds.

It's also vital to understand that this exemption applies only to your primary residence. Second homes or investment properties are not covered. Each individual's situation is unique, so it would be wise to consult with an attorney experienced in Puerto Rican bankruptcy law to explore all your options and ensure your property is as protected as possible under the law.