You’ve decided that declaring bankruptcy is the best way to move forward, but have you thought of how your timeshare property will be handled? You are considered an owner of the property, but because you co-own the timeshare with one or more other parties, things can become a bit complicated. Here, you will learn some of the common ways that people navigate bankruptcy while owning a timeshare.
How Does Bankruptcy Affect Timeshare Ownership and Responsibility?
Bankruptcy can drastically affect timeshare ownership. Like a home or other land properties, timeshares are considered real estate and must be listed as such on the bankruptcy. At the time of purchase, you may have taken out a timeshare mortgage to cover the buying costs. If your lender foreclosed on your timeshare before you declared bankruptcy, some of your remaining debts owed toward the timeshare might be discharged. The amount you can discharge depends on your individual circumstances.
If you still own the property at the time that you declare bankruptcy, you have more options, which are determined by the type of bankruptcy, how much equity you have in the timeshare, and whether you want to try and keep the timeshare property.
Keeping the Timeshare in Chapter 7 and Chapter 13 Bankruptcy
To keep your timeshare property in a Chapter 7 bankruptcy, you will have to meet a few requirements. First, if your timeshare has equity (i.e. if the value is less than or equal to the amount you still owe) your creditor will not want to sell it. Second, if you have equity in the property, you may still be able to keep the property if you can borrow from a friend or family member the amount needed to purchase the equity. Third, if the trustee—the person overseeing your case—cannot sell the timeshare, you will have the option to keep it.
In Chapter 13 bankruptcy, you can keep all of the properties that you list as long as you can afford to the payments along with your payment on your bankruptcy repayment plan. In the event that you can’t afford the payment, you will either need to let go of the timeshare or another of your properties that require a payment.
Surrendering the Timeshare in Chapter 7 and Chapter 13 Bankruptcy
Should you decide to get rid of the timeshare in your Chapter 7 or Chapter 13 Bankruptcy, you will no longer be held liable for the remaining mortgage balance or maintenance fees that you accrued before you filed for bankruptcy. However, any maintenance fees that accumulate after you file are your responsibility because you are still the legal owner of the property until it is sold off. Surrendering a timeshare property that has equity is good if you have any priority debts, such as child support or unpaid income taxes, because the trustee will apply the proceeds of the timeshare to those first. In a Chapter 13 bankruptcy, the trustee will not sell your timeshare if it has equity, so you will have to make those arrangements yourself.
If you are considering filing for bankruptcy and want help navigating the implications to your timeshare or other properties, call your local Miami bankruptcy attorneys at AM Law. Our team is experienced in all types of Florida bankruptcy cases.