TimeShare sold to daughter within 2 years of bankruptcy filing.
My husband and I will be filing chapter 7 this week due to overwhelming hopital bills. I am 69 and he is 76. in 2004 we bought a time share in Las Vegas. My daughter has made all the payments, and has used it every year with us, paying for all our plane tickets, as well as providing for our entertainment. Last year, we sold her the timeshare for the balance of the mortgage which was a little over $4,000. She paid it immediately, and continues to bring us each year, paying for us. She also has giving me money often to help me with me bills through the years. Can the bankruptcy cause her to lose this property? It just seems so unjustice and cruel result for someone who has been so giving, and who has basicaly paid its value ten times over to us.
Reply from DebtCollectionAnswers.com:
Elaine: You really need to consult with a bankruptcy attorney right away because your situation could be quite complicated. Ordinarily, I would tell you that your former timeshare will not be a part of your bankruptcy because you sold it to your daughter before you filed and so it does not belong to you anymore. However, what is concerning is the timing of the sale, which could cause a problem for you. The reason for my concern is that if the sale was finalized within a year of the date that your bankruptcy began, then even though the property is now owned by your daughter, the trustee in your bankruptcy may view the sale as "an illegal transfer" especially in light of the fact that you sold it to her for a little more than $4,000, which I doubt was the market value of the timeshare at the time. If it's viewed as an illegal transfer, the trustee will take back the timeshare, sell it and use the sale proceeds to pay your creditors. Also, you will not be able to get a discharge of debts through bankruptcy. However, if you sold your daughter the timeshare more than a year before the date of the start of your bankruptcy, then you have nothing to worry about. Your daughter gets to keep the timeshare and you and your husband get your debts discharged.
A bankruptcy attorney can help you sort out the timing issue and if there is a problem with it, he can help you make your case with the trustee as to why the transfer should not be considered fraudulent and why you should get a discharge of your debts. Good luck!