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Timeshares and Bankruptcy

If you are considering bankruptcy, you may be wondering what will happen to your car or your house. In fact, these questions are so common, that we have prepared a client FAQ detailing exactly what happens in the bankruptcy process to these and other essential assets. You may also  be wondering, what will happen to your timeshare.

When you buy a timeshare, you are buying a share of ownership in a property with many other people. Most clients who own a timeshare financed the property with a timeshare mortgage or a loan from the developer. Because a timeshare is subject to a mortgage, it can be foreclosed upon, just like a home. Additionally, most timeshares charge monthly or annual maintenance fees for the upkeep of the property.

What happens to a timeshare during bankruptcy depends on which type of bankruptcy you file  and what you want to see happen to the timeshare. If a timeshare is worth less now that when you originally bought it, you may be happy to get rid of it in bankruptcy. If this is the case, both Chapter 7 and Chapter 13 bankruptcy will allow you to surrender the timeshare, wipe out your liability for the mortgage balance, and eliminate any previously accrued maintenance fees owed before the filing date. For Chapter 13 filers, this would be contingent on your obtaining a discharge after completing your three or five-year repayment plan.

Increasingly, courts have seen borrowers who want to keep their timeshares after bankruptcy. This is particularly the case when the value of the timeshare has increased since purchase or the  borrower has significant equity in the timeshare. In that case, what happens to the timeshare is more complicated.

In a Chapter 7 bankruptcy, the trustee liquidates assets that have value and distributes that money to creditors. This means that if you have equity in your timeshare, the trustee will likely want to sell it and give the proceeds to creditors. The attorneys at Levitt & Slafkes, P.C. can help you determine whether an exception applies that would help you keep the timeshare or whether you would be able to repurchase the equity from the trustee to avoid a sale.

In a Chapter 13 bankruptcy, you are allowed to keep all of your property, including timeshares. However, in a Chapter 13 bankruptcy you must also demonstrate that you have enough income to pay the timeshare's monthly mortgage payment and maintenance fees in addition to your required monthly repayment plan payment. If you don't have enough income to cover everything, you need to consider either surrendering the timeshare or letting go of another expense.

foreclosure attorney nj.jpgWe have helped borrowers all over New Jersey keep their timeshares and eliminate unwanted timeshares in bankruptcy. Whether you are ready to file or just exploring your options, we can help. During your free consultation, the knowledgeable attorneys of Levitt & Slafkes, P.C. will carefully explain the bankruptcy process so you can make an informed decision about how to best proceed. Contact us today at 973-323-2953 to schedule a free initial consultation. 

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