Timeshare and Bankruptcy

[txdebtfiasco]

What is the name of your state? TX

Background:
My husband and I own a deeded timeshare outright. We purchased it last May, and the mntn. dues are paid for two years. I am considering filing Chapter 7 BK on $60K+ of credit card debt. I first tried a debt settlement company, but I can't even make those monthly deposits, and fear future litigation. This is my debt, solely, my husband is not on any of the accounts. Our home is in my name, and there is very little equity since we have had it for less than 3 years. We do NOT want to include the home in the BK since the payments are up to date, and the mortgage bank is NOT one of the card companies (we can do that, right?).

Questions:
1. We want to keep our timeshare, since it is paid and then some, and we love it. We have been advised by a family member (who did Ch13BK several years ago) to sell our timeshare to a friend or family member before we file for BK. I am uncertain about this because this seems like an attempt to hide assets, and don't want to get "caught cheating," since I am afraid of the potential consequences and although I hate to give it up, would rather be free and clear of the debt.

2. Could we possibly keep the timeshare if we agree to pay the fair market value or something (which money we could get from a family member)? Or should we just let it go in hopes of a better judgement?

3. The debt settlement rep. told me that if I file BK, then the credit card company can "sell" the debt to another company or bank and they can then try to collect the debt. Is this true, and if so, then what is the point of filing for BK anyway? I still wind up in the same boat, plus all the fees.

4. I own my car, with $3K value, and my husband purchased a used vehicle in January 05 (I am not on the loan or the title). It was purchased for $12K, and we owe $10K after down payment etc. Can we keep both vehicles?

I think that's it for now. Thanks for your input. I do have an appointment with a lawyer in 4 days, but wish to get some other opinions on options before that meeting.

Thank you.

 

[Ladynred]

Afraid you'll have to kiss the timeshare goodbye. While TX is a very debtor-friendly state with virtually unlimited homestead exemptions, that exemption will NOT apply to anything other than your primary residence. With 100% equity, the Trustee will seize the timeshare, sell it, and distibute the money to your creditors pro rata.

1) ANY transfer of property, ESPECIALLY to an insider, that happens within 1 year of filing can be deemed a fraudulent transfer. Trustees can invoke an even longer look-back period if they so choose. You'd be in deep do-do selling the time-share to a 'friend' just before you file for BK.

2) IF you could afford the LUMP SUM payment to the Trustee to REDEEM the property - paying the Trustee to keep it at fair market value - then you wouldn't need to file for bankruptcy, would you ?

3) The debt settlement company is telling you a half-truth. Any creditor can sell ANY defaulted debt, including those discharged in bankruptcy, to the winning bidder. That does NOT mean that junk debt buyer can then collect on a discharged debt. The permanent injunction of the discharge prevents ANY collection attempts on a discharged debt. If they try it, they are in violation of the law -- at least the CURRENT law.

4) TX allows you to exempt 1 vehicle for each licensed driver in the household. Besides, if your husband isn't filing and you're not on the loan or the title, its not YOUR asset.. at worst, you'd have a 50% interest in it as a community asset.

 

[txdebtfiasco]

Thanks, more...

Thank you Ladynred for the input, I really appreciate it. I also appreciate the non-judgemental attitude (THANKS!).

If you don't mind, I have a couple more questions.

1. My husband and I have a joint bank account. Should we go separate since he has no part of the BK?

2. He also has his own savings account (less than $100) at a different bank, and I'm not on it in any fashion. I assume we don't have to put that in?

3. Do I have to claim his income? We did file joint tax returns.

Looking forward to your (and/or others') perspective.

 

[tertiary3]

I think that the timeshare issue requires a bit more exploration...

If you sold your timeshare to a family member at FMV, there would be no need for the trustee to bring it back into the BK. It would seem rather pointless to do so unless the trustee is an expert at getting timeshares sold at higher than FMV prices. What you'd better do, however, is be able to PROVE that your timeshare was sold at a reasonable and fair price.

While I don't know BK, I do know real estate, and in real estate, most timeshares are worth zilch if you're asking someone to find a buyer in a short period of time. Those major scam timeshares like Trendwest/Worldmark (where the "housekeeping fee" is as high as a regular non-member rental rate) are particularly worth nothing in BK. Just go to eBay and you'll see hundreds of sellers a month trying to sell their timeshares with NO bidders even at the lowest prices. Factor in the selling fees and your timeshare might not even be worth the time.

Of course, I have no idea what timeshare you have. For all we know you could be members of a highly valuable and marketable timeshare in Hawaii.

T3

 

[txdebtfiasco]

Thanks for the comments

No, it's not a particularly valuable timeshare, and I had also thought about asking a lawyer about possibly keeping it in the family, with a FMV, or keeping the TS in our name, but selling the "right of use" to family for the FMV if we were to actually sell it. That way, we'll get the "right of use" back in about 3-5 years, and the deed doesn't change hands so many times, most importantly, the CREDITORS still get the money, probably more than what they would if they tried to sell it themselves. I hope that the trustee will see that we are at least trying to be honest, and give the creditors their due. I went to a website that sells timeshares, and ours is valued at $1K - $5K. As you mentioned, a quick sale would be less, so if we try to offer $2500, they should see that as reasonable, and no additional filing fees and transfers and whatnot.

Thanks for the input.