Timeshare Foreclosures and Your Credit Score
If you have exhausted all of your other options for getting rid of your timeshare including selling on the web, auctions sites like eBay and Craigslist, donation to charity, and giving it away, a timeshare foreclosure may be your only option. The time share foreclosure process is somewhat similar to a home foreclosure, in that eventually the property will eventually be returned to the lender and sold at a sheriff’s auction to the highest bidder. Being armed with information, and knowing how this process can affect you and your future purchasing/lending power is a key part of a successful foreclosure. This post will help to prepare you for what may lie ahead, and provide information regarding credit score changes you may experience as a result of a timeshare foreclosure.
How the foreclosure is executed:
When you signed the contract for your timeshare, you signed a promissory note for the lender to assure them that you would be paying the money back, with interest. When your timeshare forecloses, the lender will obtain possession of the property and sell it at auction. Sheriff sales, like the one your timeshare property will go through when it is auctioned off after foreclosure, are matters of public record. A foreclosure itself is a legal action which is handled by the court system, which is again, public record. All of the major credit agencies - Experian, Equifax, and Transunion - monitor, report, and base their credit scores on information contained in court public records.
How much will a timeshare foreclosure affect my credit score?
A foreclosure, and similarly a deed in lieu of foreclosure, will affect your credit score between 230-280 points, depending on the reporting credit company. This point deduction of 230-280 points, and negative mark on your credit score, will stay on your credit report for anywhere from 7-10 years, and companies will be able to purge this information upon closer inspection after the 10 year period has elapsed.
I am not positive if short sales are done in timesharing, but a short sale will affect a homeowner’s credit score from 80-120 points, and will be present on the credit score for a period of at least 7 years following the short sale.
Be aware that not all timeshare companies will report missed, late, or foreclosure account notifications to credit agencies, but this does not mean your foreclosure will never get reported. There are many instances where timeshare owners do not notice any blemish on their credit score during the foreclosure process, but just because your lender/timeshare company is not reporting the actions, does not necessarily mean you will never take a hit to your credit.
September 29th, 2008 at 9:36 am
After auction if the sale does not payoff my balance can the timeshare company come after me the deficient balance? If so, how liable am I to pay the balance off and how does the deficient balance affect my credit?
December 13th, 2008 at 8:40 am
If the time-share is paid off and only maintanence fee are required. Will halting payment of those fees influence credit score?
May 1st, 2009 at 9:53 am
I have the same question as Rex - I own my timeshare with no mortgage. Does turning in the deed in lieu of paying the maintenance fees affect my credit score?
May 8th, 2009 at 11:37 am
To answer your question a quote from the above article, - “A foreclosure, and similarly a deed in lieu of foreclosure, will affect your credit score between 230-280 points, depending on the reporting credit company. This point deduction of 230-280 points, and negative mark on your credit score, will stay on your credit report for anywhere from 7-10 years, and companies will be able to purge this information upon closer inspection after the 10 year period has elapsed.”
Is this actually going to happen? Probably not. The reason being that it is much easier and profitable for the company that owns your timeshare/whom you owe money, to use high-pressure sales to move forward with selling more timeshares than it is for them to chase you down and challenge you in court.
See the following article for more information - “What Happens if I Stop Paying my Timeshare?
June 30th, 2009 at 11:51 am
[…] If your timeshare does go all the way through the foreclosure proceedings you will be notified by mail that your deeded timeshare will be part of a trustee’s sale or public auction. At the given date, time and place your timeshare will be sold at a sheriff’s auction to the highest bidder. The auction is public record and the transaction can be recorded and reported to the IRS and credit bureaus, effectively ruining your credit for the next 7 years. This strike on your credit score can make it difficult to finance a car, obtain a loan or even buy a home. Since timeshares rarely sell at auction for the amount owed on the deed, the timeshare resort company has the option to take legal action and sue you for the remaining balance owed. Read more on timeshare foreclosure and credit scores in the post - Timeshare Foreclosures and Your Credit Score […]
June 30th, 2009 at 3:43 pm
I foolishly purchased a timeshare at Tahiti Village. Consolidated Resorts which managed the property and sold the shares is now in bankruptcy. I probably will never ever have to borrow money so I can take the hit on my credit score. If I allow the unit to forclose, I lose about $5000 of a sixteen thousand dollar purchase. If I pay a transfer fee of $3000 after I pay off the $11000 I still owe, there is a company that will relieve me of the share but I lose $19000. A real estate agent tells me I can sell the share for approximately $2000 and her fee will be $1500. I still would have to pay off the share losing $16000. Why is the forclosure reported to the IRS. Is it income to me? After all, they won’t get more than I owe. They could sue me for the remaining amount. Then I would not only own nothing but I would have a judgement against me which someone will have to pay eventually. The hit on my credit last 7 to 10 years. What about the judgement. Will it affect my estate. Do I need a lawyer to sort this out?