What to Do with your Timeshare During a Bankruptcy Proceeding
Many individuals who file for bankruptcy own vacation timeshares and can often be unsure what to do with those properties during a bankruptcy proceeding. Should they keep the timeshare or let it go? This is a question you should always ask your bankruptcy attorney!
While it’s usually possible to keep timeshares, it may not be something that your legal counsel advises you to do. Legally, the ownership of the timeshare itself is considered to be an asset. However, in reality- often the only true value of a timeshare lies in the memories and experiences of the vacations you take. Despite what the timeshare developer's sales weasel told you, your timeshare is probably worth very little on the
resale market, and in many cases may be difficult to even give away. Regardless of how much it means to you, that timeshare is only worth what someone is willing to pay for it. The first step in your decision should always be to obtain a free valuation or comparative market analysis of the timeshare.
This will give you a realistic idea of what the timeshare can reasonably be expected to sell for on the secondary market. Share this valuation with your attorney, and listen to the advice he or she gives you!
The expected resale value of a timeshare may not be great, but it is legally considered to be an asset that must be disclosed in your bankruptcy. Given the low resale value of most timeshares, exempting a timeshare from the bankruptcy proceeding is usually not a problem. However, don't forget that if you decide to keep the timeshare you will be financially responsible for the maintenance fees and taxes that are normally due each year. Maintenance fees are charged whether you use the timeshare or not. And if you cannot afford to go on vacation or pay the next maintenance fee bill- or if you already owe past due fees on your timeshare, your attorney will likely advise you to let the timeshare go, discharge that debt, and then just pay for vacations in the future as you take them. If you attorney gives you this advice, just be sure that they follow through to ensure that you are released from any and all financial obligations of that particular timeshare ownership in the future.
When used consistently, a timeshare ownership can be a fantastic way to travel and can provide you with years of incredible vacations. But if you
are currently having trouble paying your bills and are considering bankruptcy, your timeshare should be one of the first things you consider eliminating from your budget.
If you need help selling a timeshare ownership- always take your time and research the secondary market fully. Call your resort to ensure you know and understand both the transfer process as well as the expected cost to change ownership. You should also ask your resort developer or timeshare management company if they can recommend a timeshare reseller to you. DO NOT simply accept a recommendation, however! Some resorts have existing relationships with upfront fee resellers and are paid referral fees for owners who pay the marketing companies. Other resorts have internal resale programs which may not be effective. Take any information or referral you receive as simply an introduction to another option and always do your due diligence in investigating the company.
The most important thing to remember is to NEVER PAY A LARGE UPFRONT FEE to sell or liquidate an unwanted timeshare. A respected resale broker will only earn a commission at closing when the property is sold!