Going through the bankruptcy process can be enormously beneficial if you find yourself unable to meet your financial obligations with no imminent relief in sight. Of course, discharging your debts through a Chapter 7 bankruptcy or establishing a repayment plan under Chapter 13 demands a thorough review of your existing assets. While many types of assets are easy to quantify, some people have questions about timeshare interests, where the owner shares access to a given property with others.
Even though the timeshare developer typically has title to the property, under bankruptcy law, timeshare interests are treated in much the same way as a primary residence. When you file for bankruptcy and still own part of a timeshare, you’ll need to declare that interest on the applicable schedule, just as you would a property that you own outright.
Likewise, if you took out a mortgage to help obtain your timeshare and the loan is still active, that must be detailed on Schedule D, which concerns creditors that hold secured claims. In this form, you’ll also declare whether you intend to keep the timeshare interest or surrender it to your lender. For cases in which a financial institution has already foreclosed on a timeshare, any remaining funds owed would be listed as an unsecured claim.
If you’re unsure about the disposition of your timeshare, a threshold question is whether you have any equity in it. During a Chapter 7 bankruptcy, a timeshare with equity can be sold by the bankruptcy trustee in order to repay creditors. When no equity exists, the interest will likely be surrendered. Any remaining debts owed to the lending institution or developer would be subject to discharge.
Through Chapter 13 bankruptcy, you can formulate a plan to save your timeshare in the same way that you would your home. This requires you to have the income necessary to pay maintenance costs and any mortgage obligations.
Determining how to handle a timeshare in bankruptcy involves evaluating your overall financial picture and long-term goals. Retaining the timeshare may be viable for some but relinquishing it might provide financial relief and simplify the bankruptcy process for others. It’s essential to consider how your options align with your broader financial objectives.
Jeff Field & Associates advises Georgians on a full range of bankruptcy-related issues, including options for the disposition of timeshare interests. Please call 404-381-1278 or contact us online to schedule a consultation regarding your particular needs. Our offices are in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Decatur.