From the 1970s up until the current financial crisis, the timeshare industry has grown to be a financially hot industry for developers. Timeshares became a time honored way of developing resort property that was bought up all around the world by a wide range of development.
Instead of an independently wealthy person owning just one prime resort property in a particular place, creative sales has evolved to allow the common person to buy a portion of the property in the form of time.
When the industry was young, you could actually get a warranty deed for the time you owned, but this practice is not as common any longer. Most timeshares today are of the lease/right to use type, and are normally sold in week increments.
Where the week you might want to purchase falls on the calender year in relationship to the resort season usually determines how much you must pay for each week you actually purchase.
Since there must be an ongoing maintenance of the property, you will normally always have to agree to paying a maintenance fee in addition to the share of time that you own. Depending who is managing the property, all maintenance fees are subject to go up.
Maintenance fees are usually one of the soar spots for timeshare owners. The annual fee for a week’s share can often be as much as it would cost to stay in many places around the world at a discounted price for the same time.
Another soar spot with some timeshare owners today is the fact resale prices for timeshares has drastically fallen, especially for lease/right to use timeshares. Although these type timeshares can be traded to travel at cooperating resorts around the world, the economy has made the concept less attractive.
These facts are what has driven the question in the title for this article. What happens to timeshares if you have to file a Chapter 7 bankruptcy today?
With timeshare values dropping to pennies on the dollar in today’s market, unless you own the timeshare outright, a bankruptcy trustee in a Chapter 7 is not likely to want to liquidate it. If the share is owned outright, it is an asset, and more and more trustees are selling them for what little they can get out of them, especially if you do not exercise an exempted right to keep them.
If you have a warranty deed on the property, you will have association fees that can be severally affected by filing a Chapter 7 bankruptcy. The association fees up until the date you filed can be discharged in bankruptcy, but if you keep the property, the future fees cannot be discharged.
The same can be said for lease/right to use timeshares. You might want to be sure and check out the legal language of the contract you signed about maintenance fees before you file bankruptcy. If you still owe on the timeshares themselves, it is possible to have the amount discharged in bankruptcy if the note is unsecured. In this case, the maintenance fees will also go away.
Understanding the facts about timeshares are all good reasons you might want to consider consulting with a bankruptcy lawyer before you file a Chapter 7. Contact us today, and we will help you find a bankruptcy attorney in your area.
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