Timeshare agreements are not Simple to understand, but at the end, if you are going to enjoy the service, it is not a problem. Like anything else, no one knows the future. If your life changes and your finances are at a negative point where you are limited or p0ised to start paying certain bills first before others, bankruptcy, at times, maybe option It is fair to say that if faced With the ch0ice of paying rent or your mortgage and hold off paying your timeshare, it is a prudent decision This dilemma leads to falling behind in your timeshare payments and must be addressed Here’s our guide to how a timeshare can turn into a bankruptcy filing.
Timeshares agreements sometimes are not fair It may people into unwanted, long-term financial obligations that, eventually, they realize they want to get out of The problem is that timeshare agreements are not easy to get out of Some turn to bankruptcy as a solution is this a Viable option? The Simple answer as to whether or not you can file bankruptcy on a timeshare is yes, you can There are, however, some intricacies including a timeshare in a bankruptcy that you should consider before doing so.
How Are Timeshares Treated During Bankruptcy Filings?
When you buy a timeshare you are buying part, or piece, of an otherwise unaffordable property along With a number of other people If you can’t afford to pay the purchase price outright, you can usually obtain a loan from the developer or another lender (a timeshare mortgage) In addition to your timeshare mortgage, you also have to pay monthly or annual maintenance fees (which are similar to homeowner-association dues) to cover the costs of keeping up the property.
Bankruptcy law considers a timeshare real estate and treats it in much the same way as your house For example, if you are still In possession of the timeshare when you file for bankruptcy, you’ll list it With your other property on an offICIal bankruptcy form Schedule A/B Property Because the lender can foreclose on the timeshare if you default on the loan, the timeshare secures the timeshare mortgage and you’ll list the debt on Schedule D Creditors Who Hold Claims Secured By Property However, if the lender already foreclosed on the property, you won’t list it on Schedule N8 and any remaining timeshare-related debt Will be listed on offi0ia| form Schedule E/F Creditors Who Have Unsecured Claims.
Deeded Versus Contract Timeshares
There are two main types of timeshares:
- Deeded timeshares.
- Contract timeshares (also called “right to use” or “interval”).
If you have a deeded contract timeshare, then you have an actual interest in real property The timeshare company records the interest as a deed In the land records of the Jurisdiction where the company is based This form of timeshare is a real property interest Owners are liable for real estate taxes, usually paid through a monthly or quarterly “maintenance fee.”
With the contract timeshare (or “right to use” timeshare), the “owner” of the timeshare has a contract for use of the property But the owner has no real property interest in the timeshare Many timeshares from other countries (such as Costa Rica and Mexico) use the right-to-use contract form of timeshare Many U S timeshares are deeded Your attorney should Will determine whether you have a deeded or contract timeshare.
You should also note that some fees are not dischargeable in bankruptcy These can include fees or assessment due to a membership or homeowners association Whether this section applies to your timeshare again depends upon how it is structured.
Post-Foreclosure Bankruptcy Filings
if the bank forecloses on your timeshare before you file for bankruptcy, you can discharge (get rid of) all of the remaining timeshare-related debt in either a Chapter 7 or Chapter 13 bankruptcy The debt you can discharge includes a deficiency balance (the difference between the foreclosure proceeds and the amount you owe) and unpaid maintenance fees.
Bankruptcy Filing When You Still Own The Timeshare
Filing for bankruptcy before the lender forecloses can be more complicated than if the foreclosure has already taken place, but you have more options as well Your choices Will depend on whether you want to keep or surrender the timeshare, the type of bankruptcy you file, the amount of equity in the timeshare, and the exemption laws of your state (the laws that tell you what property you can keep in bankruptcy).
Chapter 7 Versus Chapter 13 Bankruptcy Filings
If you file for Chapter 7 Bankruptcy and have equity In the property (Ie. it’s a “deeded” timeshare) then your trustee IS going to want to sell it There are some exceptions, but they’re rare On the other hand, one of the benefits of filing for Chapter 13 Bankruptcy is that you may continue making payments on and owning your timeshare In some instances With a Chapter 13 Bankruptcy you may be able to negotiate to reduce your timeshare’s periodic maintenance fees.
If you are involved in a timeshare agreement Situation that needs to be addressed and are in need of legal assistance, give the Law Offices of Patrick L. Cordero a call today at (305) 445-4855 for a free, no-obligation consultation.