Fallen on Bad times: request help

[mickey91701]

My family has fallen on hard times. Due to a work-related injury and illness to our son, my wife and I are forced to file bankruptcy. The only thing is that we want to keep the one thing we have left in life, our vacation club membership. We still owe on the loans for the points.

Would it be possible for our in-laws to buy the points from us, keep them in the family, as we will continue to make the payments back to my in-laws even after the bankruptcy proceedings. OR, will we lose the membership through the bankruptcy. Is it OK in Disney's eyes to have family buy them from us or will disney want them back, not allowing us to keep them in the family.

Can anyone halp?

 

[Tigger031266]

I wish that I could help. I willl keep you in my prayers. I don't think Disney cares who uses your points. I think you could sell your points to anyone. There is various websites for selling points (The Time share store, ebay). I would try to sell my points and use that money to make your payments as much as possible.

Not to offend you, but your e-mail seems a little fishy. Most DVC owners understand that we can do what we want with our points. In any case, I wish you the best. Keep in mind Disney will always be there so if you have to sell your DVC memebership, you can always rebuy.

 

[Chuck S]

If you have already filed the bankruptcy it would be the courts decision. If you have not yet filed, yes, you can sell to your parents...but assuming you are not "gifting" the membership, but are selling for cash, it would have to pass Disney's ROFR (right of first refusal). If you are gifting the membership, you still have to get a ROFR release from Disney, but for gift transfers, death or divorce, they are pretty automatic.

However, for any transfer to take place, the loan must be paid off in full. If you are talking just about the dues, then it would be less of a problem...unless under new bankruptcy laws the courts are allowed to review your last several property transactions. That would be something to discuss with your attorney.

 

[jennymouse]

I don't know the answers to your questions but wanted to wish you the best of luck. Life deals the ups & downs and this is one of the downs but I'm sure you'll be on an up again before you know it.

 

[brasey]

Not to offend you, but your e-mail seems a little fishy. Most DVC owners understand that we can do what we want with our points.

Just curious what you mean fishy? I think when it comes to bankruptcy they look at everything and try to close the loopholes for the people claiming it so you actually pay out the most you can and the creditors lose as little as possible.

 

[mickey91701]

I wish that I could help. I willl keep you in my prayers. I don't think Disney cares who uses your points. I think you could sell your points to anyone. There is various websites for selling points (The Time share store, ebay). I would try to sell my points and use that money to make your payments as much as possible.

Not to offend you, but your e-mail seems a little fishy. Most DVC owners understand that we can do what we want with our points. In any case, I wish you the best. Keep in mind Disney will always be there so if you have to sell your DVC memebership, you can always rebuy.

I would like to know what YOU meant by FISHY. BY the way, it did offend me. I know, as a DVC owner for over 6 years what I can do with points. My question was since the points are still financed through Disney, would I lose them or can I sell them to my in-laws since I technically dont own them. Thanks, really.

 

[dianeschlicht]

Part of your question would have to be answered by the legal personel on IF you can keep it and still make a payment of that debt. If you can not keep it with the bankrupcy proceedures, you would have to go through ROFR when your in-laws purchased it from you, and that woud mean the danger of losing the contract to Disney. Ideally, the bankrupcy would allow you to keep that debt and also the membership. Good luck!

 

[Anewman]

Sorry but I feel that DVC is an asset and should be listed as such during bankruptcy proceedings.

 

[Lewisc]

You need to talk to a bankruptcy attorney, preferable one that has experience with DVC.

None of us really know what your legal rights are. It sounds like you financed your purchase through Disney. You might review your contract/loan agreement and see if there is language regarding bankruptcy.

 

[ducklite]

I used to be a BK paralegal. Don't listen to most of the above. First, is this a Chapter 7 or 13?

Your DVC points are considered a secured debt. You can REAFFIRM that debt and keep the points provided that A. Disney as a secured creditor is willing to allow you to do so--there's no reason for them not to unless you are behind on the payments. In that case they will require you to become current and stay current, or they will force you into a forclosure. B. The monthly payment for them can work within your budget that you will need to provide to the court and your creditors at your 341 meeting.

HOWEVER--you at this point have equity in those points, and that is not an asset allowed by the law for you to keep. You *may* be allowed to in a chapter 13, it's probably it will need to be disposed of in a chapter 7. Your creditors could force the liquidation for their behalf, and you'll have no choice but to do so. More so in a chapter 7 than 13.

Who you sell the points to will generally be up to you--BUT THEY MUST BE SOLD FOR FMV. So if you sell them to a relative, it can't be for $20 a point. You will be required to document any assets you have disposed of in the previous 60 or more days prior to filing, and creditors have a field day with transfer of assets to avoid bk proceedings--unless you can prove that you sold/transfered for a reasonable FMV and used the proceeds to pay debt. Even then if one unsecured creditor was favored over others it can get ugly.

Now leaving the BK out of it, you can legally TRANSFER as a "gift" (there are tax repurcussions) DVC deeds without right of first refusal. However it's my understanding that to *sell* them requires a right of first refusal execution on Disney's part. And on that note, IF this is what you want to or must do, you or your attorney must contact DVC about it.

There's a lot more legal mumbly jumble, but that's the gist of it. Good luck.

Anne

 

[MiknMinMouse]

As the last poster said it is possible to reaffirm the debt and keep your DVC. Be sure to get a really good lawyer. Sadly many people think that just because someone has to file bankruptcy they're no good and that's not the case. There are so many things that can happen in someone's life that can make that the only viable option. Don't let anyone get you down

 

[dianeschlicht]

Thanks for the clarifications, ducklite! I figured they would be able to keep it IF they were current, but I guess I never thought they could gift it if they still owed on the loan.

 

[happyrebster]

Hey Mickey,

I am an attorney, but without BK expertise. Still, I think you should consider the following:

I would advise doing nothing without speaking to your attorney first. (obviously?) There are a number of limitations on making any transfer to family members during a BK, even if made for full market value. It MAY be fine under certain chap 13s; but in other circumstances it could raise a huge problem. Certainly, I suspect, all of your creditors would need to be notified.

Good luck!

 

[ducklite]

Thanks for the clarifications, ducklite! I figured they would be able to keep it IF they were current, but I guess I never thought they could gift it if they still owed on the loan.

It can't be gifted if there is a lien on it. In this case they would have to sell it for full market value, and use any proceeds to pay debt.

Transfer by sale of assets in a BK proceeding to a relative is legal and allowable provided you can prove a FMV transfer. You'll have to show a paper trail for the entire transaction, right down to a deposit slip, and turn the proceeds over to the trustee.

And happyrebster is 100% correct, do not do ANYTHING or dispose of ANY assets without speaking to an experienced BK attorney first!!!

Anne

 

[jim1051]

Another fly in the ointment. Disney has right of first refusal on DVC resale. That is they can buy it from you at the price you are trying to sell it to someone else or let you sell it. Its their discretion.

 

[mello]

I don't know too much about the legal aspects, but I understand what you're going through. My neice was born with all kinds of medical problems; they didn't know if she would live, and my brother in law, who is an electrician, got laid off because of recession in our area at about the same time. The medical bills were horrendous, and by the time it was all said and done the insurance had run out. They had always been very responsible citizens, paid their bills on time, etc, but there was no way they could meet all the medical bills - they were in the hundreds of thousands - and they were forced to declare bankruptcy. It's SO sad that this is the case, but I guess medical bankruptcies are quite common.

Anyway, that was a few years ago, and I don't know if things have changed since then, but as I recall, they were allowed to exclude some things from the bk, like their house and their cars. I don't believe they had much in credit card type debt, and it was primarily the medical bills that were erased so to speak. They still can't get credit cards (which is probably not a bad thing lol), though they were able to refinance their house. But I just wanted to chime in and agree with the pp who mentioned that people tend to look down on those who declare bk, or thing of them as irresponsible or whatever, and that is NOT always the case, and it's just such a shame. But things will get better for you eventually

 

[bongo59]

the transfer or sale has to occur before filing for bankruptcy...........but under the new bankruptcy laws you maybe able to get the judge to allow it.............but you in laws will have to have certified funds to get it done and have the judges blessings..........and your creditors will not like this one bit if they know you will benefit in any way................the new bankruptcy laws are very slippery for debtors.............that is why i am a big proponent of only buying into DVC when you can fully pay for it...............i think it is huge mistake to finance a vacation perchase and it is one of the reasons why the nation carries the highest individual debt amounts and lowest saving rates in history.......................it is pure bad financial business.................but most ignore that good advice because they feel like they can manage debt with a good cash flow..................very bad thinking too................

 

[happyrebster]

I don't think that the right of first refusal will be a major problem. Call your guide and explain the situation. I share a points account with extended family and our guide has always assured us that, should we ever decide to split up the account, ROFR will not be a problem. He says that Disney isn't likely to exercise it when the transaction is between/amongst family. But you would need to give your guide a heads up so he or she can help you navigate that part of the equation. So don't worry about that. Address the concerns of judge and creditors first -- if they agree, Disney will likely get on board -- esp. since (as others have noted) the transfer price will be have to be reasonable and fair.

Again: wishing you good luck with the whole thing.

 

[ricapito]

Hello. Not a lawyer --- yet, but did just take the BK law class in law school. This is not legal advice. There have been major changes in BK law as of last fall. You need to speak with a BK attorney before doing anything! Depending on your situation there are actually a few possible ways to keep it depending on your state BK "exemptions" status and the state you live in and if you have equity in it etc. There are also very strict laws regarding transfers in the months before a bankruptcy. Don't screw around here. Pay the few hundred $ and get the right advice.

BR

 

[ducklite]

the transfer or sale has to occur before filing for bankruptcy...........

This is not the case. FMV sale of secured property (especially interest in real property) can happen after filing provided all proceeds after liens are turned over to the trustee. When it may NOT happen is after filing but before the 341 meeting. At the 341 meeting the creditors must be put on notice that the sale will be commenced. Unsecured and other secured creditors have no right to prevent the FMV sale of secured property, provided that the net proceeds will be handed over to the trustee for equitable distribution under the law.

but under the new bankruptcy laws you maybe able to get the judge to allow it.............but you in laws will have to have certified funds to get it done and have the judges blessings..........

Certified funds? Get real. All it requires is a paper trail like with any real estate transaction. The important thing is that the sale is for FULL MARKET VALUE, and the sale documents including a new deed are appropriately filed with the appropriate county clerk. This will probably require the hiring of an attorney in Orange County, FL to facilitate the transfer/filing, and paying all applicable "closing/transfer" fees. This means that DVC will have to be offered ROFR, and refuse it's option. If the pending sale is at or under FMV, DVC will certainly excercise their option to buy back the property, which defeats the entire excercise.

and your creditors will not like this one bit if they know you will benefit in any way................the new bankruptcy laws are very slippery for debtors.............

Actually the creditors won't give a crap as long as the sale is for FMV and they receive a benefit--such as a distribution of funds.

The key is to NOT transfer or dispose of ANYTHING before seeking the advice of a competent bankruptcy attorney.

Anne