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Timeshares are properties held commonly by multiple Individuals, each of who can use the property for a particular time in the year jointly. Common examples of timeshares are holiday homes or condominiums in a large resort. Whether you can protect your timeshare while you file for bankruptcy mostly depends on the state you file in as well as the bankruptcy chapter you file under.
Depending on the worthiness of the timeshare you hold, you can either surrender or use exemption for the same. If you are looking to surrender it, you will need to continue paying the maintenance fees until the deed is transferred into someone else name.
What happens to a timeshare when you file for bankruptcy?
A timeshare, when filing for bankruptcy is given the same value and importance as your house. And you must list it along with the other property that you own. This is how you need to document it when filing for bankruptcy-
- If you own a timeshare while filing for bankruptcy – if you still have ownership of a timeshare at the time of filing for bankruptcy, you will need to mention it with all your other properties under schedule A/B Property.
- If the timeshare has already been foreclosed at the time of filing for bankruptcy – if it is already foreclosed, which means you do not own the property anymore, you will not list it under Schedule A/B. all debts arising out of the same will be listed under schedule E/D – unsecured claims.
What happens to a timeshare when you file for bankruptcy after foreclosure?
If your timeshare has been foreclosed by the bank before you file for bankruptcy, then under such circumstances, you can get the remaining debt discharged. The discharge value is the difference between the foreclosed value and the dues that you still owe.
Timeshare and Chapter 7
There is no point in selling the timeshare if the value is less than the amount you owe. In such circumstances, you need to continue making the payments.
However, if the value of your timeshare is more, then the trustee will sell it to pay your creditors. You can protect your timeshare under chapter 7 only if –
- Your State Exemption permits
- Your trustee is unable to sell it and hence abandons it
- If you have borrowed from friends or family to purchase equity
Timeshare and Chapter 13
When you file for bankruptcy under chapter 13, you do not have to foreclose any property as under chapter 7. Rather, you are given the chance to catch up on your arrears in a 3-5 years repayment plan. However, if it gets difficult for you to pay off all the monthly dues, you will need to surrender your timeshare or something alternative to pay off the dues.
If you are looking at filing for bankruptcy, it is always best to get a consultation from a professional. To get your doubts cleared, book a session today at – https://recoverylawgroup.com/bankruptcy/.