Why You Shouldn’t Stop Paying For Your Timeshare
The yearly maintenance fees keep climbing. The special assessments arrive without warning. You feel trapped by a contract you no longer want. It’s understandable to think, “I’ll just stop paying. That will solve the problem.”
But this is a trap. Stopping payments on your timeshare won’t set you free. Instead, it will trigger a series of financial and legal consequences that can be far more damaging than the timeshare itself. Before you make a decision you’ll regret, it’s crucial to understand what really happens when you walk away from your obligations.
The Immediate Fallout: Collections and Fees
The moment you miss a payment, the trouble begins. First, you’ll be hit with late charges and interest. The amount you owe will start to grow immediately.
Next, the calls and letters will start. The timeshare company or its hired collection agency will begin a persistent campaign to get you to pay. This can be a stressful and harassing experience that disrupts your daily life long before any legal action begins.
The Legal Hook: The Timeshare Lien
If you continue to miss payments, the timeshare association will take legal action. Their first step is almost always to place a **lien** on your timeshare interest.
Think of a lien as a legal claim against your property. It’s a public record that announces you owe money. This lien serves as collateral for the debt, giving the association the legal right to seize and sell your timeshare to satisfy what you owe. This lien is the first step toward foreclosure.
The Ticking Clock: Judicial vs. Non-Judicial Foreclosure
Once a lien is in place, the association can move to foreclose on your timeshare. This process happens in one of two ways, depending on state law:
- Judicial Foreclosure: The association must file a lawsuit against you and get a court’s permission to sell the property. This process can be slower and more formal.
- Non-Judicial Foreclosure: The association does not have to go to court. Instead, they follow a set of state-mandated procedures, which often involve posting notices and public auctions. This process is typically much faster.
Regardless of the method, the end result is the same: the association takes back your timeshare, and you lose any and all equity you may have had.
The Lasting Scar: Severe Credit Damage
This is where the long-term pain really sets in. Many people believe that if the timeshare company takes the property back, the story is over. It’s not.
A foreclosure is a major negative event in the world of credit. Even if the timeshare association doesn’t directly report it to the credit bureaus, foreclosures are public record. Credit bureaus actively scan these records. Your foreclosure will almost certainly be found and added to your credit report.
The impact is severe. You can expect your credit score to drop by over 100 points. This single event will make it very difficult to get a mortgage, a car loan, or a credit card with reasonable interest rates for up to seven years. It will be a red flag to every future lender.
The Final Blow: The Deficiency Judgment
This is the most financially devastating consequence, and it’s one that most owners don’t see coming. A foreclosure sale for a timeshare rarely brings in enough money to cover what you owed.
Let’s use an example. Say you still owed $15,000 on your timeshare. The association forecloses and sells it at auction for $5,000. You are now legally responsible for the difference.
This is called a **deficiency judgment**. The timeshare company can—and often will—sue you for that remaining $10,000. This means you lose the timeshare, your credit is ruined, and you still owe a substantial sum of money. It’s the ultimate “rubbing salt in the wound.”
The Smarter Path: Choosing a Real Solution
Stopping payments is a reactive move that creates a much larger problem. It feels like an escape, but it’s a head-on collision with financial disaster. The better path is to be proactive and seek a legitimate exit strategy.
Instead of walking away, explore options like a deed-back program with the resort, carefully navigating the resale market, or seeking professional legal assistance to challenge the contract. These methods require effort, but they allow you to exit your timeshare without destroying your financial future.
If you are feeling overwhelmed by your timeshare and considering drastic measures, don’t go it alone. Contact the professionals at Stonegate Firm for a free consultation. We can help you understand your rights and find a safe, legal, and effective way to end your timeshare obligations for good.
