Timeshare debt can be a big burden on borrowers. While there are ways to get out of timeshare debt, it is important to understand what you are getting into before you sign any contracts.
A timeshare is a vacation ownership share in a resort property. A timeshare usually involves a upfront purchase price and annual maintenance fees. These fees can be quite expensive, and many people regret purchasing a timeshare. This article will discuss the different options for escaping timeshare debt, and some of the best ways to avoid it altogether.
While most lenders will not lend on timeshares, there are other types of loans that can help borrowers get out of their timeshares. One option is to refinance the timeshare with another lender. There are also companies that specialize in helping consumers get rid of their timeshares. These companies may charge a fee for their services, but it can be worth it if you are struggling to make the payments on your timeshare debt.
Depending on your situation, you might want to try to talk to the developer of your timeshare about working out a payment plan or forgiveness. If you cannot come to an agreement, then you can file for bankruptcy to get out of your timeshare. However, your credit score will take a hit from this, so it is not an ideal option for most borrowers.
If you are unable to pay your maintenance fees, you will likely be blocked from using the resort’s online booking system and, if you belong to an exchange program like RCI, you will be unable to trade for new vacation spots. Skipping your payments can even lead to a lien being placed on the deed of your timeshare. In some cases, this can cause the timeshare to go into foreclosure, and you will lose ownership of the property.
One of the most common reasons that a person might miss their timeshare maintenance fees is because they are unable to afford it. The costs of the fees can add up quickly, especially if the resort has added additional charges such as increased cleaning and maintenance. If you are unable to pay your maintenance fee, it is important to seek legal assistance right away.
The COVID-19 pandemic has put a significant strain on travel, and S&P Global Ratings expects that the performance of timeshare loan securitizations will continue to deteriorate, as the overall economic environment continues to weaken (see “Various Credit Rater Actions Taken on 34 Companies in Lodging And Leisure Sector,” published March 20, 2020).
Timeshare foreclosures are considered mortgage foreclosures by some lenders, and as such, they require a three-year waiting period before you can apply for FHA loans. Some lenders, however, do not consider timeshare foreclosures as mortgage foreclosures and instead treat them as consumer debt. These lenders can often offer borrowers better terms than what the original timeshare lender gave them. These lenders are usually private lenders that specialize in lending to borrowers with poor credit histories.