Posted on: 8 January 2016
A Chapter 7 bankruptcy can have an impact on every aspect of your financial life, including your timeshare. Depending on certain factors, it is possible that the trustee might decide you cannot keep it. If you have a timeshare and are thinking of filing, here is what you need to know.
Can You Use an Exemption for the Timeshare?
In a bankruptcy filing, each person is allowed to use exemptions to protect some of their assets from being seized by the trustee. The amount of the exemptions vary by state. There are strict guidelines which govern what type of assets can be saved by the exemption.
Unfortunately, a timeshare is considered to be a luxury item. As such, the exemption cannot be used to save it. How your trustee views the timeshare depends on the type it is.
What Happens With a Right to Use Timeshare?
If you have a right to use timeshare, or one that you can only use during specific periods of time throughout the year, you are not considered to be an owner of it. This type of timeshare is usually treated as a lease.
When it comes to a lease, the trustee decides whether or not to take over the lease or reject it altogether. Unless the lease has some value in the eyes of the trustee, it most likely be rejected. If the lease is rejected, your obligation to the agreement is ended.
What Happens With a Deeded Fractional Interest Timeshare?
A deeded fractional interest timeshare means that you own an interest in the timeshare. It is because of this that the trustee would view the timeshare as secondary real estate property.
Secondary real estate property can be taken by the trustee. As such, your ownership in the timeshare can be seized by the trustee and sold. The funds raised from the sale would then be paid to your creditors.
What If You Owe Fees and Other Expenses?
If you have any owed fees or other expenses from the timeshare, they can be discharged when the bankruptcy is complete if they were incurred prior to filing. Any fees that were added after you filed might have to be paid. Whether or not you are responsible depends on your state's laws.
An experienced bankruptcy attorney can help you assess the situation with your timeshare and other assets that you own. You can also receive help with determining which assets can be saved by the exemption.
For more information, contact Greg Dunn Bankruptcy Attorney or a similar legal professional.Share