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Old 09-14-2019, 11:32 AM   #1
mark0157
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Default How to value a DVC contract in bankruptcy

We are facing a potential bankruptcy (due to a business failure) and we want to keep our DVC.

Obviously this is more difficult to do in a Ch 7 vs. a Ch 13, and how we file will depend on how the "numbers" end up.

How would I go about valuing our points? Based on resale prices? We bought direct, so reselling would make them less desirable since the new buyer would not have the same benefits as we currently have.

Has anyone been through this (feel free to PM me)?

Our attorney said it will all depend on the value of the points. The worst part about all this is that many of the points were paid for by my FIL on a credit card, but Disney never put him on the deed, so in essence we could lose his points.
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Old 09-14-2019, 11:45 AM   #2
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The only definite value of points would be either the income you could generate from renting them or the price you would get from selling them.
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Old 09-14-2019, 12:48 PM   #3
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It depends on what you are trying to do; if you want to use a lower valuation for your list of assets - use the price you paid for them, especially if it was years ago. I would assume your trying to get to a delta between ASSETS and LIABILITIES. Donít list your this asset as rental potential and go with the lowest valuation: either 1. actual contract paid or 2. indirect, not direct through DVC, average resale value, whichever is less.
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Old 09-14-2019, 01:00 PM   #4
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Quote:
Originally Posted by zafiro View Post
It depends on what you are trying to do; if you want to use a lower valuation for your list of assets - use the price you paid for them, especially if it was years ago. I would assume your trying to get to a delta between ASSETS and LIABILITIES. Donít list your this asset as rental potential and go with the lowest valuation: either 1. actual contract paid or 2. indirect, not direct through DVC, average resale value, whichever is less.
i agree...i would take rough resale x .50 - no guarantees here, especially in a quick sale. maybe even x .25.
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Old 09-14-2019, 01:10 PM   #5
MagicJourneys
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When there is a liquid market for something, as there is for DVC points, the correct valuation is based off the current market price, that is, what someone is willing to pay for it. Valuing any asset, whether a house, jewelry, DVC points, or anything else, by looking at what it was purchased for possibly many years ago would be likely to give a significantly misleading valuation, and may constitute fraud. Just make sure to take into account any borrowed or banked points when using resale prices to value contracts.
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Old 09-14-2019, 01:13 PM   #6
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Sorry to hear about the business fail. That is tough for any family to weather.

Good luck.
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Old 09-14-2019, 01:19 PM   #7
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Quote:
Originally Posted by MagicJourneys View Post
When there is a liquid market for something, as there is for DVC points, the correct valuation is based off the current market price, that is, what someone is willing to pay for it. Valuing any asset, whether a house, jewelry, DVC points, or anything else, by looking at what it was purchased for possibly many years ago would be likely to give a significantly misleading valuation, and may constitute fraud. Just make sure to take into account any borrowed or banked points when using resale prices to value contracts.


I would go with resale market calculator from resale brokers site and use that as a parameter.

Sorry to hear your losses. Good luck.
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Old 09-14-2019, 01:39 PM   #8
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Also want to say how much this saddens , probably, all Mouseowners to hear of your overwhelming problems.
I worry about making this decision if OP has actually rented his points for profit in the past or if his Yearly tax Filings reflect this. I seem to recall advice renting just once changes the way the IRS views your points value basis.

Best wishes
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Old 09-14-2019, 04:07 PM   #9
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In all likelihood, the attorneys (paralegals) doing the paperwork will want a document verifying the value, which would most likely be a letter from a resale broker state the average price per point on a certain date and other factors (such as loaded, stripped, etc).

Any value would also go against any liability (i.e., is there a loan to be paid off from the proceeds). Judges typically don’t see value in timeshares.

If there is a loan, Disney will reaffirm the loan in bankruptcy proceedings as long as all payments are current.

Rental should only come into play as an income source. We’re not talking ownership of an apartment complex. If there was only mild rental activity, it would be very easy to explain that as “renting to friends” just as anyone might do with anything.

There are so many variables, type of bankruptcy, other assets, budgets, etc., that it’s impossible to say what will happen. The reality is some have managed to keep their DVC contracts through bankruptcy and others have surrendered them.

In terms of value - resale market is probably the most reliable number with some adjustment based on status of points and timeframe of sale.

Dirk
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Old 09-14-2019, 05:03 PM   #10
mark0157
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Thank you everyone. Your insight is much appreciated!!

I'll contact a broker and try to get a letter of value. The contract is currently stripped, as we rented the points to get cash for the business, but we are not frequent renters (we usually use all of our points and have nothing left to rent).

God knows the stress of all this we could use a Disney trip once we get back on our feet.
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