Puerto Rico drowns in debt - What is the U.S. going to do about it?

'This was a painful decision.'

U.S. territory Puerto Rico defaulted its first payment of nearly $400 million - so what is the territory going to do?

LOS ANGELES, CA (Catholic Online) - Puerto Rico has suffered a recession for the past decade, resulting in the government borrowing money from foreign investors. This practice has created a substantial amount of debt the island is unable to pay back.

Under U.S. Federal law, Puerto Rico is ineligible to file for Chapter 9 bankruptcy, which would allow them to negotiate with their creditors and restructure their debt.

According to USA Today, Puerto Rico Governor Alejandro García Padilla conducted a televised address on Sunday afternoon, in which she explained the reasons for not paying the first bond payment.

"This was a painful decision. We would have preferred to have had a legal framework to restructure our debts in an orderly manner. But faced with the inability to meet the demands of our creditors and the needs of our people, I had to make a choice. I decided that essential services for the 3.5 million American citizens in Puerto Rico came first."

Since the outbreak of the Zika virus, Puerto Rico's already limited resources have been used to help victims and help prevent the spread of the disease.

The territory's treasury secretary, Jacob Lew, wrote a letter to congressional leaders on Monday to ask for legislative help.

Lew described the several services affected by the economic issue including medicine rationing in hospitals and the constant struggle to fight Zika.

"Unsealed septic tanks, abandoned homes, cemeteries, piles of old tires, where mosquito larvae grow, for example, must all be treated, but the government is struggling to pay for the work to be done," Lew wrote. "Unless Congress passes legislation that includes appropriate restructuring and oversight tools, a taxpayer-funded bailout may become the only legislative course available to address an escalating crisis."

Should the United States government choose to do nothing, the island would be on its own to pay back its nearly $71 billion debt.

Unlike the bond it failed to pay on Monday, some of Puerto Rico's debt is in the form of obligation bonds - meaning they are constitutionally protected, resulting in a legal limbo for the island.

The territory would be caught up in court disagreements for years, which would drive away new investments and ultimately force the island into a deeper recession.

Municipal Market Analytics analyst Matt Fabian spoke on Sunday to say, "There's some consensus" that Puerto Rico needs a financial control board.

Unfortunately for the island, Padilla has been appealing to Congress to extend municipal Chapter 9 bankruptcy for some time and has received no response.

According to the Treasury Department, nearly 45 percent of Puerto Ricans live in poverty and 1,500 residents leave each week, which only lowers the economy further.

If Puerto Rico is going to get out of debt, it requires the help of the United States - particularly since its situation is partially to blame on the United States' law against Chapter 9 Bankruptcy.

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