Timeshares can frequently be handled according to your preference in bankruptcy: you can either KEEP them or even better for many people . . . YOU CAN GET RID OF THEM. A discussion of timeshares and bankruptcy should probably be broken down into three topics: 1) How to retain timeshares in bankruptcy, 2) How to surrender timeshare responsibilities in bankruptcy, and 3) How to recognize timeshares too valuable to retain in bankruptcy.
Many times the value of a timeshare is either too insignificant to administer in bankruptcy or your State’s bankruptcy exemptions will protect it in bankruptcy. Because your timeshare may fit within this value range, it may be possible to retain your timeshare even though you are filing for bankruptcy.
In order to retain a timeshare in bankruptcy in Indiana, we first check to see how much similar time shares sell for. Many times there is either a very low-price-fetching or NO market for many timeshares. Other times timeshares may value in very low such as for $1000-$3000 for the timeshare right. Timeshares in this range will be protected many times by Indiana’s “tangible property and OTHER REAL ESTATE” bankruptcy exemption. Therefore, if this exemption is properly taken and the Trustee “abandons” your time share, you usually can keep your time share property. Remember, ALL regular fees and ongoing maintenance amounts must continued to be paid if you plan on retaining the timeshare.
To many of our clients, keeping a time share through bankruptcy is the LEAST concern on their mind. Most of our clients would prefer to GET RID OF THE TIMESHARE property. They can no longer afford the fee and maintenance on the property. What sounded great during the timeshare presentation has now become a nightmare. Fortunately, timeshare responsibilities can be fully surrendered in bankruptcy.
Because bankruptcy can discharge debt and reject contracts, timeshare debt and ongoing contract responsibilities can be FULLY eliminated through a bankruptcy filing. To surrender a timeshare, you need to file bankruptcy, list the timeshare creditor, and clearly state your intention to surrender in the Statement of Intention section of the filing. You may also be requested to “deed” back the property to the timeshare company at some point.
Although it is very rare, some timeshares are too valuable to retain in bankruptcy. Most time shares only can generate some $2000-$3000 or less in value in an open market because they simply possess too little rights with too many ongoing fees – these type of timeshares can almost always be retained during bankruptcy. But, as in every area in real estate, some timeshare situations can be vastly different than the industry “norm.” Timeshares, in theory, can be worth even hundreds of thousands of dollars: it is VERY possible that a time share can exceed whatever Indiana (or other state) exemption allots for your bankruptcy protection.
Time shares that could be of VERY substantial value should always be fully analyzed by a real estate Agent, appraiser, or timeshare expert. A professional valuation of the timeshare will allow your bankruptcy attorney to help you make the plans necessary for retaining as much value from the timeshare situation as possible. Remember, all time shares are not treated equally: value is the key to how your time share will be treated in bankruptcy!
Whether you want to surrender or retain your timeshare, you can usually achieve your goal in bankruptcy. Bankruptcy usually allows you to completely reorganize your financial status no matter what situation you are facing. Therefore, timeshares are usually no major obstacle to the debt relief you can achieve in bankruptcy.