What happens if you default on timeshare payments?
This is a fairly common query on timeshare forums and complaint websites; sometimes the question is posed by a genuine customer who is looking at their options, while oftentimes it is posted by cancellation scammers looking to promote fake services.
Here’s the truth about what will happen if you simply stop paying for your timeshare for any reason and default on timeshare payments.
Defaulting on timeshare payments
If you do not make your timeshare payments and continue to fail to meet them, forfeiture is an inevitable result. The best thing you can do is inform yourself as to what will happen if you forfeit on your payments and weigh up the risk to your credit rating (as well as any potential legal action against you when you default on timeshare payments.
The consequences of forfeiture will depend on your own circumstances, i.e. how much you have left to pay on your timeshare loan. If you’re behind on maintenance fees you will probably find that you can get back on track and up-to-speed quickly when your finances improve, but if you cannot make your loan repayments you could be facing a bumpy ride (and damage to your credit score).
Consequences when you default on timeshare maintenance fees
Each timeshare company has its own policy, but most will have delinquency fees and interest charges on the outstanding balance applied either monthly or even daily when you miss maintenance fees! In order to use your timeshare you must be up to date with your payments. Thus the first consequence is inability to use your timeshare when you wish to. There will usually also be a reinstatement fee; eventually, if you show no signs of paying what you owe a collection agency will generally get involved.
Consequences when you default on loan payments
Defaulting on your actual loan payments will receive more severe action from the outset; timeshare ownership is much like real estate ownership in that foreclosure is a real danger if you fall behind. Likewise, if you used your credit card to purchase your timeshare you will be liable for those repayments just as you would with any other loan. If you fail to meet your responsibilities legal action may be taken, and in many instances the debt will be sold to a collection agency. Please note that debt collection agencies are a great deal less friendly than timeshare providers.
Debt Collection Agencies
Once your debt has been sold to a collection agency your credit rating will immediately take a hit, and the risk of being sued rises when you default on timeshare payments. You might even be reported to the Internal Revenue Service which would make future investments hard to come by. Furthermore, you will face continual harassment from collection agencies until your debt is paid.
Your credit rating
If you default on your timeshare you can be sure that your credit rating will be negatively affected if you are not able to rectify the situation and get back on track with your payments. This will make it difficult for you to get credit in the future.
Beware timeshare cancellation scams
Finally, when you default on your payments you are likely to be targeted by timeshare cancellation scammers looking to capitalize on your vulnerability. They will claim to offer you a way out which will not give you a bad credit rating, but in truth they will only make it worse. You cannot simply cancel if you are not within the recission period, and there is no magic solution.
So you see, there’s no easy ending when you stop paying your timeshare loan and fees; just like any big purchase this is a long-time commitment which requires real thought and consideration before your sign on the dotted line.