Many timeshare owners who were once wowed by the concept of "vacation ownership" find themselves in an inconvenient financial circumstance. If the combination of monthly installment payments, vacation exchange fees and monthly maintenance fees are leaving you unable to make ends meet, you may be able to find relief in bankruptcy.
When you file for bankruptcy, the court will ask you to list all of your current debts and liabilities. If you have a loan balance from financing your timeshare, include this, along with any missed payments you are delinquent on. The bankruptcy court may also be able to eliminate or discharge your monthly maintenance fees, so list those -- both current and delinquent -- as well.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy requires a liquidation of assets to repay as many of your debts as possible before the court eventually discharges most of your remaining debt. If you file for Chapter 7 bankruptcy, the court will assign a trustee to your case to sell as many of your qualifying possessions as possible. There are some exemptions, including a homestead exemption for your home and a vehicle exemption for transportation purposes, but these do not cover a timeshare. The trustee assigned to your bankruptcy case will attempt to sell the timeshare before the court will discharge your remaining loan balance.
Chapter 13 Bankrupcty
Under Chapter 13 bankruptcy, the court will restructure your debts into an affordable repayment plan, payable in installments over the course of three to five years. Depending on the amount of your other secured debts, the court may ask you to surrender the timeshare back to your timeshare company in order to free up additional cash to repay your other creditors. If you keep the timeshare, you must continue making timely monthly payments to your lender as scheduled in your original finance agreement.
Rather than allowing your timeshare to go through a foreclosure in bankruptcy, try offering it back to your timeshare developer in a deed-in-lieu-of-foreclosure agreement. Though you will lose money invested in the property, you can avoid the foreclosure process, as well as unnecessary damage to your credit report. If you wish to recover some of your investment in the timeshare, you can sell the property to a buyer or donate it to charity for a tax deduction. Be aware, however, that most timeshare owners only recover between 10 and 30 percent of their original investment.
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