DVC & Bankruptcy

[Saratoga]

Hello. Does anyone know if the DVC is considered a secured or unsecured debt for it involves an actual deed.

Thanks.

 

[Chuck S]

I'm just guessing, but since the mortgage would be against the DVC Ownership, it makes sense that it would be secured. But that may vary for timeshares

 

[JimMIA]

That's a question for attorneys, preferably one who specializes in bankruptcy.

However, the DVC interest itself would obviously not be any kind of debt. It's an ASSET, not a liability.

If the DVC interest is financed, the method of financing would determine what kinds of claims could be made against it, I believe.

If it had been purchased directly from Disney via a mortgage, I think that mortgage would be a secured debt. If it were financed by a personal loan or HELOC, I think that would be unsecured.

But you'd really have to check with an attorney to find out exactly how the DVC interest would be treated.

 

[JimMIA]

If it were financed by a personal loan or HELOC, I think that would be unsecured.

I hate to debate with myself (I always lose!), but I think I misspoke here.

If you used a personal loan or HELOC, the DVC interest would have been purchased for cash...and therefore, it should be just an unemcumbered asset. I think.

Any attorney's out there?

 

[KAT4DISNEY]

More than likely it is secured but you would need to check with your lender to verify. It should be, but sometimes things get overlooked. I have known at least one person and bank that were surprised and unhappy to discover this sort of omission.

 

[drusba]

If your loan is through Disney, there is a mortgage and the applicable Disney entity (or entity to which Disney has transfered the mortgage if it has done so) has a secured loan with your DVC interest as the security and it would be treated as such if you filed bankruptcy, i.e., a debt you owe which is secured by your DVC real estate interest.

If your loan is through anyone else, it may or may not be a secured loan but if a secured loan the security for it is likely not going to be your DVC real estate interest. For example, if you have a home equity loan that you used to pay for DVC, then it is a secured loan but the security for that loan is your own home not the DVC interest.

 

[Dean]

I hate to debate with myself (I always lose!), but I think I misspoke here.

If you used a personal loan or HELOC, the DVC interest would have been purchased for cash...and therefore, it should be just an unemcumbered asset. I think.

Any attorney's out there?

Unless it's a mortgage, my understanding is that the DVC would be treated as an asset and the loan would be handled independently for any Heloc, CC or personal type loan. I believe a TAMMAC loan would be personal, not sure how the loans that TSS have arranged are written as a mortgage or not.

 

[goofyinnc]

Have you tried selling it? Someone might be able to get a good deal and help you out at the same time!

 

[AlwaysEeyore]

I have the same question and was wondering if anyone ever found out the answer. I bought my DVC from TSS 2 years ago and really do not want to lose it.

 

[drusba]

I have the same question and was wondering if anyone ever found out the answer. I bought my DVC from TSS 2 years ago and really do not want to lose it.

I do not know the nature of your loan when purchasing from TSS. However, your question indicates a possible misunderstanding of the bankruptcy process. If the DVC property is security for the loan then the particular lender will be entitled to the property or the proceeds of the sale of the property during the bankruptcy process up to the amount owed the lender. Nevertheless, any property of value that you own can be sold during the bankruptcy process to pay off debts that you have accumulated unless the property is exempt in bankruptcy, and vacation homes/timeshares are generally not exempt. In other words, if the DVC porperty is security for a loan, that simply means the particular lender gets first cut of the proceeds from the sale of the property. If it is not security for any loan, that means all the other creditors get to share in the proceeds of the forced sale that is most likely to occur while you are in bankruptcy.

 

[jlewisinsyr]

I do not know the nature of your loan when purchasing from TSS. However, your question indicates a possible misunderstanding of the bankruptcy process. If the DVC property is security for the loan then the particular lender will be entitled to the property or the proceeds of the sale of the property during the bankruptcy process up to the amount owed the lender. Nevertheless, any property of value that you own can be sold during the bankruptcy process to pay off debts that you have accumulated unless the property is exempt in bankruptcy, and vacation homes/timeshares are generally not exempt. In other words, if the DVC porperty is security for a loan, that simply means the particular lender gets first cut of the proceeds from the sale of the property. If it is not security for any loan, that means all the other creditors get to share in the proceeds of the forced sale that is most likely to occur while you are in bankruptcy.

Unless you use the timeshare/vacation home as one of your exemptions, which in most cases doesn't make since if you also need a vehicle and primary home as your exemptions.

 

[TheRustyScupper]

Hello. Does anyone know if the DVC is considered a secured or unsecured debt for it involves an actual deed.

From what we have been told:
1) For DVC, you do not have a property deed.
2) You have an interest in a lease.
3) If you used a 2nd mortgage to buy it, you need to check with your counsel.
4) In almost all cases, any net value goes into the pool to repay creditors.

 

[DL1957]

From what we have been told:
1) For DVC, you do not have a property deed.
2) You have an interest in a lease.
3) If you used a 2nd mortgage to buy it, you need to check with your counsel.
4) In almost all cases, any net value goes into the pool to repay creditors.

Item number 1 is not correct. You do have a deed when you pay off loan. My DH and I have paid off some of our points and have a deed. Also when you take out the loan there is a title search.