Bankruptcy and DVC

[figment795]

Keeping DVC.

 

[CarolAnnC]

DVC is an asset and I believe others have forfeited their ownerships in Bankruptcy court.

Please consult an attorney for specifics as laws may vary from state to state.

 

[Red315]

It will be treated as an asset that the estate will sell and distribute the proceeds amongst your creditors (I work in bankruptcy).

 

[yensidfan99]

I believe it would depend on the chapter you would be filing. If you are filing a chapter 7 than all assets would be sold. If you are filing 13 and working to repay your debt then you are allowed to keep your assets as I understand it. Sorry that you are going thru this. I hope it all works out.

 

[SSR]

It will be treated as an asset that the estate will sell and distribute the proceeds amongst your creditors (I work in bankruptcy).

Not necessarily. If the contract is underwater (ie no equity) the most likely scenario is that Disney files a motion for relief from stay and forecloses on it, thus clawing it back for itself.

 

[SSR]

DVC is an asset and I believe others have forfeited their ownerships in Bankruptcy court.

Please consult an attorney for specifics as laws may vary from state to state.

yes. Consult an attorney. That being said, bankruptcy is uniform across the country (that's the point of the bankruptcy code). State law exemptions do vary state to state, however, so your advice to see an attorney is spot on

 

[Red315]

I was using the assumption that there was equity in it.

 

[figment795]

Keeping DVC

 

[CarolAnnC]

The other reason thinking of filing is my house is worth a great deal less and we have a second on it. So I was told if I file the second would be eliminated. We can afford DVC and our 1st mortgage on my income. But with our house continues to be worth less the second is killing us. Thanks for all the quick replies. We have owned SSR since 2004 and BLT since 2008 not sure how you can tell how much equity is in it since we are still paying off the loans.

Just a thought, but what about selling the DVC contracts and paying off those loans. That would leave you more cash in pocket to put towards your primary home and thus maybe avoid Bankruptcy?

 

[SSR]

I was using the assumption that there was equity in it.

Gotcha. I also guessed about the equity piece (judging the SSR and BLT signature in the OP's post which, unless a ton of money was put down, are likely close to breakeven, mildly above water). I'm sure Disney will find a way due to late fees or other default provisions to find no equity. In my experience no Trustee will want to market and sell the ownership interest since only that small sliver of "profit" (if any) after DVC is paid will be available to creditors. Under such a scenario, the more likely result is that the DVC interest might be forfeited to DVC or abandoned altogether (i.e. taken back).

 

[SSR]

We have owned SSR since 2004 and BLT since 2008 not sure how you can tell how much equity is in it since we are still paying off the loans.

Compare what you owe on them versus what you see them listed for on The Timeshare Store's website or DVC By Resale (i.e. what you could get for them if you sold them today). Then you'll have a better sense whether you're upside down.

 

[Deb & Bill]

Have you tried to refinance your house at a lower interest rate and include the second mortage in it? We recently refinanced our home at about 2% less and combined some other loans with it (yes, not the best idea), but we're saving about $1K a month and and reduced the mortgage to 15 years as well.

 

[figment795]

Have you tried to refinance your house at a lower interest rate and include the second mortgage in it? We recently refinanced our home at about 2% less and combined some other loans with it (yes, not the best idea), but we're saving about $1K a month and and reduced the mortgage to 15 years as well.

Not really.

 

[littlestar]

I would try to sell it. Talk to someone at the Timeshare Store (they are great to work with) and get an idea of where you're at on your loan and your equity based on what you could sell for.

I hope for the best for your family - this terrible economy really stinks. We keep hearing rumors that one of the big employers in our town (Eli Lilly) will probably downsize half of their work force if this healthcare is ultimately passed - and who knows what's going to happen to our hospitals and medical device maker jobs, too. It's a scary time. I wish your family the best.

 

[figment795]

I would try to sell it. Talk to someone at the Timeshare Store (they are great to work with) and get an idea of where you're at on your loan and your equity based on what you could sell for.

I hope for the best for your family - this terrible economy really stinks. We keep hearing rumors that one of the big employers in our town (Eli Lilly) will probably downsize half of their work force if this healthcare is ultimately passed - and who knows what's going to happen to our hospitals and medical device maker jobs, too. It's a scary time. I wish your family the best.

Thanks.

 

[rstackjd]

You MUST contact a BK attorney to determine this. I'm a BK attorney (Licensed in WI and TN only) and just handled a BK for DVC Members with 210 points. Based on their particular circumstances we were able to protect the entire asset. This was a Ch. 7 case.

The real issue will be availability of Exemptions, especially what is known as the "wild card" exemptiin

 

[sweetdana]

2 things ..
1) I believe you got misinformation, or may be misunderstanding about a 2nd mortgage. They have as many rights to a property as a primary (1st) mortgage holder.
2)You cannot keep anything with value it in as your own with minor restrictions to this. The courts have the rights to decide what you can and cannot afford. It isn't up to which payments you want to keep.

If there is any equity (in the DVC verses what you owe on it), affording the payment doesnt matter. If you owe someone (like a second mortgage holder, or credit cards ect)which it shoulds like you do. The equity or $$ belongs to the others you owe the $$ to.

Also I work in the mortgage field. Lenders can choose to remove a second or even 1st for that matter from title. Even allow a person to keep only their 1st or have a free and clear home, (pulling their second (or 1st) off title. ... AND they only do this if they get enough $$, IE you settle with them to release that lein. ... Giving them say 1/2 or 3/4ths of what you owe every lender and every market has a $$ amount, but no one willingly lets a loan go, without trying to get it. I am assuming it is larger than 10K. Talk to an attorney.

Otherwise the second lein holder has the right to force a foreclosure. Even if you pay your 1st lein on time. They will not just "let it go to BK". Wash their hands and let you keep your home, as well as your time share. They want the $$ you spent on the home you bought.
Assume you owe 100K on a 1st mortgage and 50K on a second mortgage and your home is worth 120K. They will take even 5,000$ after attorneys and closing costs on your home and 2K on your equity in DVC over letting you keep both and not getting anything. If you signed a contract to pay a debt, (mortgage) they gave the $$ to someone and will want it back. They will try to get as much as possible. ***

Lastly, a BK court will not liquidate and wash credit cards allowing you to keep a vacation home monthly payment. Even at owing exactly what it was worth or more, they would force a sale, or send back to Disney. After BK they look at payments and make sure you can afford bills. They would require you to pay a credit card or installment (car loan) payment over a second real estate property. They use logic on what you should do, not what you want to do. Once you file your hands are tied, you have little to no input. You cannot state I cannot afford my second lein on my primary residence or my credit cards I already spent the $$ on, but I can afford a second real estate loan payment for vacations. Won't fly. Call an attorney.

*** I am not an attorney, I do however work with a mortgage comany and if I was in charge of your file this is how I would proceed. I would try to make as much $$ back from your file, as I could noting we could not take everything you owed. We would require a full liquidation for any $$ even 1,000$ it wouldn't matter. I cannot see ANY lender washing there second lein as you are impling is possible, they would force a sale of the primary residence property, and the time share.

Call an attorney before doing anything EVEN selling, as this may make a difference. I think there is a misunderstanding on what BK is, and how it works and even the 3 real estates loans you currently have. I wish you the best of luck, it is a freaking tough job market right now.

 

[rstackjd]

The other reason thinking of filing is my house is worth a great deal less and we have a second on it. So I was told if I file the second would be eliminated. We can afford DVC and our 1st mortgage on my income. But with our house continues to be worth less the second is killing us. Thanks for all the quick replies. We have owned SSR since 2004 and BLT since 2008 not sure how you can tell how much equity is in it since we are still paying off the loans.

You REALLY need to consult an attorney who actually does bankrtuptcy in your area. It's a very complex area and even some "non-bankrtupcy" lawyers don't really understand it. Under the right circumstnaces (rare but it happens) you may be able to file a Ch. 13 and strip out the second mortgage on the home. Whether you can keep your DVC membership is a complex analysis involving income, available exemptions, which chapter, etc etc.

Legal questions need to be answered by lawyers (in your area) not on internet forums. Any reasonable BK attorny will give you a no cost, no obligation consultation. Our "trade association" is the National Association of Consumer Bankruptcy Attorneys - www.nacba.org - look for a local attorney there.

 

[figment795]

Thanks

 

[rstackjd]

Ok so let me see if understand what you are saying. Even though my house is worth less then my first mortage lets say by $4000 and my second is lets say $ 50000 then the second mortgage can force us into foreclosure?


After DH and I talk to an attorney. It looks like DH and I are going to sell DVC 1st . The reason I was considering it was our house is under water.

NO NO NO!!! If your home is worth LESS than the first mortgage, you very well might be able to strip the second! This is VERY complicated but very doable.

DO NOT sell the DVC points before talking to the BK attorney - talk to them first - then decide.