Three Alternatives to Timeshare Foreclosure
If you own a timeshare and are struggling to keep up with the maintenance fees every year, not to mention the occasional special assessments, you might wonder what would happen if you just stopped paying the maintenance fee and allowed your timeshare to get foreclosed on.
If your timeshare is actually paid for, this may seem like an easy way out. But if you are thinking that the resort's HOA (homeowners association) will just let you slide on the maintenance payments and repossess the timeshare, no harm no foul, that is very far from the truth about what will happen.
There are big consequences to allowing a timeshare foreclosure. So you want to avoid it if at all possible. You don't want to take that kind of hit on your credit report, especially if you are already in financially difficulties. Damage to your credit usually only makes things worse.
How Deliquency and Foreclosure Can Hurt Youu
If you decide to simply stop paying your maintenance fees (or your loan if you still have one), you will end up taking a pretty big hit to your credit rating.
In addition to that, though, you may find yourself on the receiving end of aggressive collection agency phone calls and letters, and eventually either the HOA or the timeshare developer may decide to both foreclose on your timeshare and seek a judgment against you. So in the long run, you may not even get out of paying what you owe.
Alternatives to Timeshare Foreclosure
This advice here is primarily for owners who have already paid for their timeshare. If you no longer can keep up with your annual maintenance fees or special assessments, your best option is to get rid of the timeshare. This may take some time and may cost you a bit more money in the short term, but once you can transfer the ownership to someone else, you can breathe a sigh of relief.
First things first though, pay what you currently owe. If you are delinquent with your maintenance fees right now, try to get the money together to pay it. You don't want to risk a ding on your credit report for late payments or non-payment.
1. Sell Your Timeshare
If you own a desirable resort and your week is highly sought after as well, you shouldn't have any problem selling the timeshare as long as you set a reasonable price. You can check completed auctions on Ebay to get an idea of what your week is actually worth. Or check sites like Redweek.
Even a very desirable resort may take some time to sell however. If you want to get rid of your timeshare quickly, you may want to improve your chances by offering to pay closing costs and not attempting to recover this year's maintenance fees from the buyer, essentially giving them a free week if you have not already used this year's week yourself.
Just keep in mind that the best way to sell your week or points sooner rather than later is to set the right price. This will usually be MUCH lower than what you paid for it -- as much as 50% to 90% less, depending on your resort and the brand. So walk into this with your eyes open and set a fair price upfront and you will be out from under your maintenance fees that much more quickly.
2. Give Away Your Timeshare
Is your timeshare not that great? Is it for an off-season week or is it located someplace that is overbuilt like Orlando, Florida? Then you might have problems selling it at any price. Your best option here then might be to simply give it away. Even then, this might take some time, but usually you can give away a timeshare as long as it isn't a total dog.
A couple of things I would try - list the timeshare on Ebay for $1 with no reserve. Post it to Craiglist as a giveaway. Start with an offer that asks the buyer to pay only closing costs. If that doesn't work, then you can offer to pay closing costs, but I would wait on that. If you are current with this year's maintenance fees, you probably have a bit of time to play with. Your goal is to get your timeshare sold before next year's bill comes due.
if your timeshare is a dog, you could offer to pay someone to take it off your hands -- but only offer closing costs and this year's maintenance fees. And whatever you do, do not pay thousands of dollars to some timeshare resales company that wants you to pay upfront. You will often find that you are still the obligated party in that case, so avoid resellers that solicit you and offer to sell the timeshare for you or take it off your hands unless they are actually having the deed transferred to them. Consult with your own attorney to make sure you are not getting ripped off.
3. Donate Your Timeshare
If you don't want to bother with the hassle of selling your timeshare or prefer not to spend money to give it away, then you may want to donate your timeshare to a non-profit. There are a couple of organizations like Donate for a Cause that are set up to take timeshare donations in exchange for a tax deduction for you. They use the proceeds to support various causes.
But if you want to go this route, then you must be current with all of your fees. You cannot donate a timeshare if you aren't up to date with maintenance fees and you can't donate one if you are still paying off a loan.
What to Do if You Are Still Paying the Loan
If you still owe big bucks on your timeshare, you have a lot fewer options. Most of the time, your unit won't be worth what you owe on the loan. In this situation, you may want to approach the developer's association about deeding back your timeshare to them. In most cases, they won't even consider this option, but if the property is still in development and/or the construction phase and they are actively selling it, you might have a little more bargaining room to maneuver.
At any rate, you should at least talk to the financial office before you make any decisions about defaulting on your loan. Because of the times we are in, many people are experiencing the exact same difficulties you are and so you may find some companies are willing to help you avoiding foreclosure because it saves them money and hassle as well. Timeshare foreclosures are a big hassle for the developers as well.
Before you leave a comment or question, I cannot offer any advice on specific circumstances. I am not a lawyer and I am not giving legal advice. I'm a timeshare owner just like you. If you need legal advice, consult an attorney.