Puerto Rico's lawmakers were debating whether to declare a moratorium on servicing the US commonwealth's crushing $70 billion debt.
Governor Alejandro Garcia Padilla is backing the bill to stop the loan payments as what he sees as the best way to guarantee services for the 3.5 million residents of the US territory in the Caribbean, in the absence of a US bailout.
The Senate approved the bill early Tuesday and the House was still debating it late that night.
The US Congress so far has not granted the island the right to enter bankruptcy protection, as the White House and Puerto Rican governor have sought.
Puerto Rico has been locked in recession for a decade, and defaulted on some debt payments at the beginning of the year.
Despite sweeping spending cuts and some policy reforms, Puerto Rico has not been able to stop the deterioration of its budget deficit.
Garcia Padilla says he wants to avoid a new default, since on May 1 the island is due to pay off $422 million in bond obligations.
The governor said that San Juan cannot pay creditors when it needs to fund public sector salaries, health and education budgets which if it neglects could unleash a "humanitarian crisis (Other OTC: UBGXF - news) ."