What Happens if I Stop Paying My Timeshare?
This question comes up a lot on timeshare forums and blogs, and it can be complicated depending on the exact procedures outlined in your particular contract. There are a few main points that stay the same regardless of whether you have a deeded timeshare or right-to-use, and whether or not you have paid off the entire amount of the timeshare. The following is a description of the steps that will take place if you decide to throw in the towel and allow your timeshare to go into default, leading to timeshare foreclosure.
Timeshare is treated equal to real estate in the eyes of the law, and it follows the same rules and regulations as a homeowners deed. Your timeshare can foreclose in the same way as your home if you stop making payments – and this does not just mean payments on the principal balance, it also includes yearly maintenance fees. After your first missed payment, whether it be a monthly payment on the principal balance or your maintenance fees, you will start receiving calls from your timeshare resort’s collection company attempting to collect a payment. You will also receive information by mail detailing the amount due, including any applicable late fees, and their intentions on reporting your delinquency to the IRS.
The harassing telephone calls and letters will continue if you choose to not pay the balance due on your timeshare, and after anywhere from 6-24 months (this is dependent on the procedure of your resort company) your timeshare company will begin foreclosure proceedings on your timeshare. Timeshare companies will try to avoid this at all costs because a foreclosure means they have to take the property back and pay legal fees for the proper paperwork to be processed. I have heard instances of resorts offering to lower the amount due on the principal, changing contacts to make maintenance fees due only every 2 years, adding extra perks into your vacation package such as extended stays, rental cars, airfare, and sometimes even offering to forgive the amount owed if the two parties can reach a suitable agreement for payments to continue.
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
Timeshares can be hard to wiggle out of, but most anything is better than letting the property foreclose and take a major hit on your credit score – especially if you are anticipating a major purchase in the near future. Timeshare foreclosure should be your last resort if there is absolutely no way you can make the monthly or yearly payments. It is wise to contact your timeshare resort if you are having financial difficulties and anticipate missing a payment, some properties will even offer to take your timeshare back under some circumstances; some resorts will also offer a Deed in Lieu of Foreclosure. You will also want to check out possibly donating your timeshare if the principal amount is paid off in full – this is not an option if you still owe money on a loan.
Helpful Timeshare Foreclosure Links:
Deed in Lieu of Foreclosure for Timeshare - http://rcivip.com/deed-in-lieu-of-foreclosure-for-timeshare/
Timeshare Foreclosure and Your Credit Score – http://rcivip.com/timeshare-foreclosures-and-your-credit-score/
Alternative Timeshare Sales Options – http://rcivip.com/alternative-timeshare-sales-options/
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My husband and I got sucked in to a Westgate timeshare when we were on vacation in Las Vegas at the PH. I felt uneasy about the whole thing after signing and discovered all this horrible stuff online about them. The following day I wrote a letter to cancel the timeshare. I faxed it and sent it Priority/Certified mail to 3 addresses. I just hope I caught it in time. I also called my credit card company and reported fraud and had the credit card number changed, so they wouldn’t be able to get any more money from us. I have no intention of paying them a dime after hearing all the bad stuff about them. I could care less if the thing forecloses. I live in a great house that my in-laws own and don’t ever have to worry about buying a house, so if my credit sucks for 7 years I don’t care all my credit cards are maxed out anyways and nobody with give me credit anyways. So @#$! those con artists. I hope they all burn in hell for ripping innocent people out of their hard earned money.
hello everyone, So I have received the warranty deed in lieu of foreclosure for my POS westgate timeshare and they are asking for $250, which I will definitely not be sending them. I have signed and have had the document notarized and it’s ready to go back to them, minus the money. but the question I have is how will this affect me tax time? Will I have to owe the irs?
We faced this situation this year because we defaulted on two timeshares through Wyndham. The ‘forgiven’ debt is considered income, which is absurd, but that’s how it is. However, if you can show that your assets are less than your debt, you may not have to claim it. Quite frankly, when we did our taxes on TurboTax, we came out owing almost $10,000. So we took it to H&R Block and, I don’t know what they did, but we ended up pretty much breaking even. So it was worth the $335 they charged us. I would also add that we had another time share from Orange Lake that we also stopped paying on after my husband lost his job. They had sent us a letter saying they were cancelling our contract. We never got any IRS forms from them, so I guess that’s that.
We have our Timeshare through Wyndham also and we can’t pay for it anymore. I called to tell them and they didn’t offer any solutions. What has happened with yours? Did you stop paying or what?
Even after reading many of these posts there seems to be some disagreement between paying/not paying balance and maintenance fees. Either way here’s my details. Purchased a TS in Vegas in 2006. Currently not past due and current fees paid but still owe about $5K on balance. Being active military, if I decide not to pay any more as most suggest what are the chances they can garnish wages, effect my 22+ yr career and/or anything else that could hinder my status as a military member? Honestly, this entire TS business is a joke, but of course sometimes some of us do feel consequences later, whether it be on a credit report of financial status. The reality for military members is if you are having financial difficulties the military can actually prevent you from getting a security clearance, which in turn has career impacting consequences. So if anyone has some insight on this please reply. I would appreciate your thoughts.
You need to first talk to your security people and explain what is going on. You need to clarify that this failure to pay is not because of financial problems, but because you got scammed. They may or may not know anything about the problem with timeshares. We recently went through our “re-investigation” at our base right when I had decided to stop paying maintenance fees on my paid-up timeshare. I called the security people and learned they had no clue about timeshares. In my paperwork for my re-investigation (for you non-government types, this is where you have to sort of re-apply for your security clearance.) I explained that (1) We had paid off the mortgage. (2) Had never been able to stay at the facility because there was never a vacancy, (3) I was refusing to pay for services NOT rendered rather than real property, so the only thing the time share could really do is deny me the privilege of using the facility, which is what they’ve been doing anyway from the beginning. I further explained that we are in very good financial shape, almost ready to pay off our house and we have no other bills, so I am not a security risk from the financial aspect. I don’t care if the timeshare puts a mark on my credit report because we are students of Dave Ramsey and are paying cash for everything now.
So my point was after all that, is get to know the security people where you are and let them get to know you and understand what the deal is with your time share and you should not have a problem in my opinion unless you have total jerks. If they are jerks, then go get your superior officer to stick up for you and tell the dogs to go bite someone else.
Good luck with this mess.
I’m going to make just one other suggestion–namely that you discuss this matter with a military attorney and get a professional, legal opinion.
One potential problem that I see is that personnel departments, (including govt. personnel depts.) don’t normally tell an applicant why they didn’t get a position or promotion, at least not the REAL reason. If you press them, they may tell you that the position was already filled, or another applicant was more qualified, but that type of explanation may just be the standard response used to protect themselves legally, also known as CYA or “cover your ass”.
An initial consultation with an attorney is almost alway either free, or provided at a nominal charge (normally, less than $50.)
I have a timeshare with Tahitti Village in Vegas. What a nightmare, I bought this thing several years ago, and have been paying for it, never been able to use it. Don’t know how we got roped into this, I didn’t think we were that dumb. We went to one of those meetings, and we spun a wheel to see if we could win extra free vacations, and we won 6 free vacations. When we called to try to use one of the free vacations, we were told that the company had gone bankrupt and the new company would not honor the free vacations. I just plain can’t afford it now that I have lost my income. Tried to sell it back or work with them, and believe it or not, no one even can tell me who owns the note. the company I bought it from went bankrupt, and the timeshares got sold off to multiple companies. I have spent hours trying to find out who owns our timeshare. With every call I just get different information, and no one can tell me what to do. What will happen to me if I just stop paying? I really don’t have much of a choice right now.
We bought Club de Soleil from the same company who owns Tahiti Village. We paid off our mortgage, and now have stopped paying our maintenance fees. We have never been able to stay at the resort because they never have vacancy. Which means they stole our week every year. They have sent three letters, one per month, saying they are going to send my account to collections if I do not pay by the end of the month. They can send my account to collections if they want. Will not affect me. My credit score means nothing to me now. I am not going to pay for something I cannot use. I am not going to pay for services not rendered.
Here is what all of you must think about:
(1) The maintenance fees increase every year.
(2) You are obligated to pay them for the rest of your life.
(3) You will not be able to pay these fees forever.
(4) The inevitable will come some day when you will be forced to tell them you can no longer pay. Once you have stopped paying, you will be subjected to the hell of their harassment for a period of time. And then you will be free.
Why not stop paying NOW and get it over with so you do not have to deal with this in your old age. Why not stop paying NOW and keep your money for yourself instead of paying it to people who hate you? The more of us who stop paying, the more we hurt the bacteria who are preying on us and others.
I did the same thing too. I stopped paying and now the collection agency is after me. Will they hit my credit?
My ex-husband and I bought a timeshare in Sedona, AZ in 2008 while we were still married…honestly, I never would have bought the damn thing, but the agent convinced my ex he would make an excellent sales person and he should get his Real Estate License and they would hire him. Using this same schpeil they convinced him we had to buy so he could sell. Sadly, to keep the peace in our turbulent marriage, I agreed. STUPIDEST mistake (apart from marrying him) ever!!!!!! When we divorced in 2009 the Timeshare and all debt there in was placed on his shoulders. I had been making payments up until January of 2010 when I gave up, couldn’t afford it and why the hell was I paying for it and he was using it anyway????? All contact infor the company has is for him…so I’ve received nothing in the last 2 years about what is going on.
That being said, it was brought to my attention by 2 mortgage companies I am trying to obtian a home loan thru that they will not underwrite a loan because I have a foreclosure on my record…WTF??????? Apparently, in May of 2010 the TS went into foreclosure and is now showing “Proceedings Pending”. I have looked in the county where the “property” is, where I live and where the collection/loan comapny is and to date nothing has been filed.
My dad spoke with two different associates (one a bankruptcy lawyer and the other a judge)…both told him that I am totally screwed. A divorce decree is NOT A LEGAL DOCUMENT (so why the hell did I get one???) and that the TS company will most definatly come after me and do whatever they have to to re-coop their money.
This totally screws me, as I have no contact with my ex-husband, I know he doesn’t give a crap about paying any of the debt we aquired together (I’ve already paid close to 15K in marital debt to date) and I don’t want to be stuck with this either.
Its creating a huge problem for my current husband and I as we want to buy this home but thus far both the companies we’ve talked to say the divorce decree isn’t legal and we have to get the timeshare foreclosure COMPLETELY removed from my credit if we want to get a home loan.
How the hell do I get out of this???? The only thought we have come up with is to contact the agency (blocking phone number of course, just in case) and see if they will settle with me for half of what is owed (my portion) and take the negative off of my credit report.
I know that Mary and others all say “don’t worry, don’t pay, they can’t touch you” but I’m finding that as far as the State of Arizona is concerned, this is not the case…has anyone dealt with trying to settle a portion of the debt and letting them go after the other party on their own????
For all I know, he has been sent DIL’s, served with Foreclosure paperwork, gotten the 1099A and 1099C all without telling me anything…and seeing as how his philosopy is “You left me, not my problem” when it comes to debt, this is not surprising. I just want out of this mess!!!!!
I’m sorry for the problems you are having, but you are mixing up too many things at once.
Your divorce decree is a legal document, but it does not affect any debt you have signed for. The creditor can some after you for payment if you signed, no matter how you divided property. What it give you is the ability to sue you ex for debt he agreed to pay, so ou can sue him if you have to make any payments.
Foreclosure is filed by the TS so that they can reclaim the TS from the property deed. This is filing to take back the deed. Coming after you for payment of any difference between the value of the property and your agreement is separate, and it is very unlikely that the TS would come after you for a difference since you could easily argue that what was sold was not what they said it was. Not a can of worms that they want to open.
The warning here for stopping payment on a TS or maintenance fees is that it will appear on your credit report, and like anything on the credit report, it means less and less over time. A current foreclosure will prevent most banks from giving you a reasonable rate on a mortgage, but after a few years you will be able to get a mortgage, just like after a bankruptcy.
I believe you will find that the foreclosure is already complete, and you can pay all you want and it will still remain on your credit report
It does all appear a jumble as I read it again now a few hours later. I think it’s just frustrating that people go thru the process of getting a divorce decree to protect them and it doesn’t…eh, se la vie at this point.
I did call the TS company today to see what the heck, and you are right…the timeshare foreclosure is totally complete. They also told me that if I haven’t heard from an attorney by now (and they do have my correct phone numbers) then I never will because they were able to sell the “property” for what was owed.
And just let me say…don’t let them tell you that it’ll ruin your credit!!!!! This has been on mine for 2 years…no ding in my credit, in fact…my credit has increased by 130 points in the last 2 years since this all started…that was a big factor for scaring me as well.
Stephanie,
The only way would be for the timeshare company to agree to take your name off the contract, and write up a new contract, placing the timeshare interest and debt, in your ex’s name alone.
It is possible that the reason some of the others here believe the timeshare company won’t (or can’t) come after you, is because they haven’t been able to come after them. That only really applies to debtors who do not have substantial money/assets.
If you have a good job, credit, assets, etc., it is very possible that they can, and will pursue you for the balance owed on that timeshare, as well as the annual maintenance fees/taxes, etc.
However, if they were able to resell the property for more than the debt owed, that should end your financial obligation.
Omg thanks for the info about resort in Williamsburg that’s the one we have and they lied I’m def gonna check out the info about lawsuit I wanna be a part of it I wanna get out of this nightmare! Thisblog is such a blessing I was losing sleep over this TS!!!!
in 2010, we were talked into buying a TS from grandview in las vegas. stupidest thing we ever did, but i guess you keep telling yourself its not so bad for a while, they never told us about the revocation form, and build lie upon lie to get us signed. we didnt know, were from the netherlands and were made to believe we made a good deal. yesterday we send their mortgage department an email, saying they could keep their TS, and we stop paying right away. kinda scary to do, but we cant be bothered anymore paying for what we never use, and got tricked into signing. have the feeling no one in that company can be trusted, so i wont respond to calls. just downloaded an app for my phone that can record calls, so if they start getting rude and abusive, they are in for a treat. will keep you guys posted on what happens. wish us luck!
well they sent me a reply to our email, and they mention something about a Secured Promissory Note? anyone know anything about this?
If you live in the Netherlands, the chances of a U.S. timeshare corporation pursuing you legally is probably slim to none.
However, when you signed that note, what you secured it with, is your interest in the timeshare property. What that means is if you don’t pay, they can repossess your interest in the timeshare property. Big deal, huh?
However, from a legal standpoint, if they do not get enough from reselling your interest in that time share property, technically, they could then go after you in court for the difference, PLUS their legal fees, court costs, and interest.
But whether they will actually take you to court? Well, if timeshare companies took everyone to court who defaulted on their payments, they would probably spend more time and money than they would ever end up recovering, and this is something they calculate in making that decision. Especially the cost of pursuing someone in the Netherlands? Chances are probably pretty good it would be in their best interests to write off the debt instead.
Unless, of course, you have lots of money and assets, and they are pretty sure that they would not only be able to win, but also know that they would be able to collect on that debt. In which case, they just might.
So for you, it becomes a risk that you have to decide on whether or not you are willing and able to take. I highly recommend consulting an attorney before making that decision.