You went to Vegas, heard the pitch and thought — a timeshare, that sounds like a good idea. A few years later, after paying the mortgage and maintenance fee, you want out. How do you deal with timeshares in bankruptcy?

If you have a mortgage on your timeshare, 99% of the time, we will tell you to surrender it in the bankruptcy. If you really like your timeshare, you can usually buy it on the resale market for a fraction of the mortgage. Most timeshares are treated like any other real property. When you stop paying the mortgage, the lender will foreclose and resell your interest to someone else. Any deficiency in the mortgage would be discharged in the bankruptcy. The timeshare would be listed as an asset in your bankruptcy, but I have never seen a timeshare with a mortgage have any equity.

If you have a fully paid-off timeshare and want to keep it in a bankruptcy, it normally doesn’t cause problems. The sale value of a timeshare can usually be exempted using the Federal wildcard, since the resale of the timeshare is usually very low. Just make sure to pay your annual maintenance fee. I have not yet encountered a timeshare in my Chapter 7 cases where the value was high enough and the debtor didn’t have enough exemptions to deter a Chapter 7 trustee from selling it.

Timeshares are horrible investments. If a timeshare really sounds like a good idea to you, buy it on the resale market from somewhere like Redweek. You will save yourself a lot of money.

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