RCIVIP Timeshare Help Resource

One of our users left the following comment on our “What Happens If I Stop Paying My Timeshare?” article:

“Hello, Really need some advice please. We live in England & have been pressured into buying a timeshare in Tennessee while on holiday in Vegas. Timeshare company that miss sold to us is Eldorado Resorts (based at Grand view hotel, vegas). They gave us misleading info & everytime we said no, we couldn’t afford it, they would push harder until we caved in & was escorted to where you sign. Awful experience.
We have paid the fee in full, on the day as they got us to take out a loan (although we now have debt on our credit card). We are willing to take a loss on this money but want the contract cancelled & no one seems able to help (UK solicitors, USA solicitors etc).
Does anyone have any ideas? If we stop paying annual maintenance fees, will debt collectors be able to take the very little money we do have? Or even our home? Will this affect UK credit scores? Will the timeshare people have to foreclose if we don’t pay maintenance? We are so worried, any advice would be appreciated.”

Timeshare laws can be tricky to grasp understanding of, especially if your timeshare property is located in a different country than where you live! Unfortunately, your timeshare is at risk of foreclosure if you do not pay maintenance fees. If you neglect to do so, the timeshare resort or management company will likely come after you with threatening calls and letters. If you still do not pay, you may be turned over to a collections agency. It is likely that your credit score in the U.K. will be affected to some degree if the foreclosure goes through, because the U.K. uses 2 of the 3 credit reporting agencies that the U.S. does. However, according to TATOC, the largest consumer-representative body for timeshare owners in Europe, “Whatever such companies may say – bailiffs cannot call at your house or take any actions against your property or finances unless a court case has been successfully brought against you and you have failed to comply with the actions demanded by the court. And remember – the only official notice of legal action against you is the one you receive from the court.”

It is wise, however, not to let your situation reach this point. If you are having trouble paying your fees (or simply don’t want to), it is best to consult your resort directly to see if you can work something out. As with any other timeshare contract that has passed its rescission period, you do have options that will not affect your credit score: sell, transfer, or donate. It may also be a good idea to contact a qualified attorney in Tennessee who deals with timeshare foreclosures if you have any further questions.

We received the following comment from one of our users:

“Help–I haven’t paid my maintenance fees or renewal fees since October. I cannot afford it anymore since my husband passed away…I spoke with a rep who stated it was international and would not affect my credit too much, my name would just be in the back of the newspaper. Then another rep said the complete opposite. The sad part is I didn’t owe too much more but now with late fees it adds up. Please help me find a reputable person to take this off my plate!”

As with any other timeshare contract that has passed its rescission period, you have three options that will not affect your credit score: sell, transfer, or donate. You can read more about each of those options here. If you are unable to sell, transfer, or donate your timeshare and do not keep up with maintenance or renewal fees, you are at risk of foreclosure. At this point you might try pursuing a deed-in-lieu of foreclosure, which will not affect your credit score as severely as a foreclosure would. It is ultimately up to Aruba law and the timeshare company if they will accept a deed-in-lieu of foreclosure.

An international timeshare situation will be a bit different than a timeshare in the U.S. because while most U.S. states have laws that strictly regulate timeshares, those laws to do not apply to a timeshare in a foreign country. Remember that there are likely different legal requirements for selling, transferring, or donating a timeshare in countries outside of the continental U.S as well. Be aware, however, that if your international timeshare is foreclosed on, it will still hurt your credit score. Consequences of foreclosure are the same regardless of where the property was located. If you find yourself stuck in this situation, it is best to contact an attorney who is familiar with the laws that govern timeshares in that particular country to avoid any miscommunication or legal troubles.

We received the following submission from one of our users about their experience with Bluebeard’s Castle Resort in St. Thomas:

“I was roped into buying a timeshare in 1993 on my honeymoon. Once we returned my wife and I realized we couldn’t afford it so never paid for it. We received a foreclosure notice from the bank that financed it and never heard from them again until last month. I received a collection notice from a collection agency saying we owe $25,000 in back maintenance fees and interest. The deed is still in my name? How is that possible when it was foreclosed on 23 years ago? What can they do if I deny owning the property listed on the deed?”

Our first reaction to this person’s story was that it is definitely a strange situation. It makes sense that the property was foreclosed on since it was never paid for, but receiving a single collection notice over 20 years later is unusual to say the least. There are a couple factors that come into play here:

• Deeded vs. right-to-use interest. When you take out a loan to purchase a deeded timeshare, you sign both a mortgage and a promissory note. The mortgage is security for the debt and permits a lender to foreclose if you don’t make the monthly payments. The promissory note promises the lender that you will repay the loan with interest. It is likely that this person’s timeshare was a deeded interest, since right-to-use timeshares are generally “repossessed” instead of foreclosed. 
• Deficiency judgment. When a lender forecloses on a mortgage, the lender then obtains possession of the property and sells it at auction. Since timeshares rarely sell at auction for the amount owed on the deed, the lender has the option to take legal action and sue you for the remaining balance owed, called a deficiency judgment. Once entered by the court, the judgment can be executed against the remaining assets of the borrower until the judgment is fully satisfied. *Note: depending on where you live, you might not have to worry about facing a deficiency judgment, since the laws vary by state. It is our understanding, however, that the U.S. Virgin Islands does allow deficiency judgments.

The strikingly odd thing in this person’s case is that the collection notice claimed to be for “back maintenance fees and interest,” not for a deficiency from the foreclosure sale. We’re also curious as to why it was only pursued once by the collection agency, and 23 years after the foreclosure. It’s likely that this was some kind of mistake and requires a phone call to the collection agency. Has anyone else heard of this happening?