When you purchased your timeshare, it probably seemed like a dream come true. You own part of a high-end vacation property, giving you the right to enjoy a luxurious experience at the resort every year. At first, this may have been the case. Unfortunately, many timeshare owners find that over time, the arrangement becomes increasingly hard to afford. If you purchased a deeded timeshare contract, you most likely had to take out a mortgage to pay for your portion of the property. These mortgages are typically structured as 10-year loans, and they often come with excessive interest rates ranging from 14-18%. In addition, you’ll be required to pay annual maintenance fees which currently average $1,000 and rise at approximately 4% each year. Many timeshare owners find that after a few years, they’re no longer able to afford these exorbitant fees.
If you’ve reached the point where you can’t make these payments, you may be looking for a way out. Unfortunately, timeshare contracts are extremely difficult to get out of. And selling your timeshare usually isn’t an option since they have virtually no resale value. As a result, many people simply stop paying their timeshare mortgage and annual maintenance fees in the hope that the resort will foreclose on the property.
Before letting your timeshare go into foreclosure, it’s important to understand the harsh consequences you’ll face as a result of this action. Due to the negative impact a foreclosure will have on your finances, we never recommend that you take this route.
There are many costs associated with timeshare ownership, including:
The mortgages for timeshares are generally held by the resort developer, not a bank. However, they function just like a standard real estate loan. As part of this agreement, the resort developer retains the right to foreclose on your timeshare if you fail to make the payments stated in the loan agreement. In addition, if you fail to remain current on the maintenance fees and other payments associated with your timeshare, you may face foreclosure.
The foreclosure process for timeshares is similar to the process for a residential foreclosure. The property will be sold at auction to the highest bidder. If the foreclosure sale doesn’t recoup the full amount you owe on the mortgage, the developer may be able to receive a deficiency judgment against you to recover the remaining balance on your loan. Since the laws governing deficiency judgments vary by state, you may not always be required to pay the developer this money.
A foreclosure can potentially have a devastating impact on your credit rating. It’s common for your credit score to drop 130-170 points due to a timeshare foreclosure. The actual drop in your
score will vary based on your credit rating prior to the foreclosure. In general, the higher your credit rating, the more it is likely to be impacted. Since foreclosures are part of the public record, it will most likely show up on your credit report and remain visible for seven years.
This damage to your credit score can result in the following consequences:
In addition, we’ve seen resorts draw out the collections process and wait until they have a buyer to move forward with foreclosure in order to maximize the money they receive. This will ultimately increase the amount you owe as part of the foreclosure process.
The money recouped by the resort developer as part of the foreclosure is considered forgiven debt. You’re required to include this money as part of your taxable income, and you may potentially owe additional taxes to the IRS due to this increase in your income.
Due to the tax ramifications and significant damage to your credit, foreclosing on your timeshare is never recommended. If you’re unable to pay the costs associated with the property, a better solution is to legally cancel your timeshare.
At Timeshare Termination Team, we’ve helped many people just like you break free of the crippling financial burdens associated with a timeshare. We understand the stress associated with your situation, and we’ll work with you to devise a customized strategy that addresses your unique needs and goals. All of our solutions are attorney-based, and this has enabled us to experience a 100% success rate with our clients.
We’re the only timeshare cancellation firm in the country with an exclusive You First Approach™ focused on ensuring you’re able to safely, legally and permanently cancel your timeshare. We understand that every situation is unique, and we’ll put your needs first to ensure our proposed exit strategy works for you. We’ll provide you with all the education needed to make an informed decision about your options.
As part of our You First Approach™, you’ll receive our Money-Back Exit Guarantee™. We’ll safely, legally and permanently get you out of your timeshare or give you a full refund, no questions asked. This provides you with the peace of mind necessary to move forward with your exit strategy.
Foreclosing on your timeshare is never the right solution. It will only create additional headaches that will haunt you for years after getting rid of your timeshare. You deserve to live life on your terms, free of all the burdens associated with a timeshare. Our team can help you cancel your timeshare and achieve this freedom once and for all.
Please contact us today to schedule a free consultation. Our team will help you get out of your timeshare without incurring the additional financial damage associated with a foreclosure.
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