What Happens If I Stop Paying My Timeshare?

What Happens If I Stop Paying My Timeshare? Understanding the Consequences

Timeshare ownership combines real estate fees and travel expenses, leaving some owners in such financial hardship that they question whether or not they should continue paying for it. If your timeshare has become an unexpected burden, you may be considering the same.

Unfortunately, there are consequences if you stop paying for a timeshare. The good news is there are ways to avoid those consequences and achieve financial freedom. So in this article, we’ll answer three questions:

• Can I Walk Away From My Timeshare Payments?
• What Happens If I Stop Paying My Timeshare?
• What Are Other Options For Getting Rid Of My Timeshare?

Can I Walk Away From My Timeshare Payments?

A timeshare owner is responsible for an assortment of annual fees. From mortgage loan payments to the often hidden cost of maintenance fees, it seems to always be one more bill after another. 

It’s no wonder many owners want to walk away from their timeshare payments. However, if you abruptly stop paying, you will likely face extreme financial distress. See, unbeknownst to most owners, their agreements are life-long. Furthermore, failing to pay your fees can result in legal issues. 

Understanding Timeshare Maintenance Fees

Understanding what timeshare maintenance fees are is essential for timeshare owners. These fees can vary greatly depending on the size and location of your timeshare. Maintenance fees typically cover the costs of amenities, utilities, and other services. It’s important to factor these fees into your budget when planning for timeshare ownership. Be sure to ask questions and read the contract thoroughly to ensure you understand all the costs associated with owning a timeshare.

Why You Shouldn’t Walk Away From Timeshare Maintenance Fees

Many timeshare owners believe they don’t have to pay maintenance fees and special assessments after paying their mortgage. That’s not the case. This annual maintenance fee is how these resorts turn a profit every year. If you attempt to stop paying this timeshare obligation, the resort will do everything possible to collect these payments from you.

What starts with a barrage of phone calls soon escalates to collection companies if you still refuse to pay. The financial burden worsens as you now risk foreclosure and possible legal action. To truly free yourself from a timeshare, you need to find a way to cancel the purchase agreement.

Loan Payments vs Annual Maintenance Fees

There are often two culprits behind financially distressed timeshare owners. The excruciatingly high costs of timeshare mortgage payments and the annual maintenance fees. You may be wondering what these expenses are, so here’s a breakdown of each:

Timeshare Mortgage Loan Payments: For those with a deeded timeshare, you are likely to take out a loan to cover the purchase cost. Like any other mortgage loan, this loan has a term length and interest rates. The American Resort Development Association (ARDA) reports that the average price of a weekly timeshare interval was $23,940 in 2023. At that cost, plus interest, a timeshare mortgage loan can be much more of a burden than many buyers expect.

Annual Timeshare Maintenance Fees: These fees are for regular upkeep at the resort, including cleaning, landscaping, building repairs, upgrades, and other expenses. Collected on an annual basis, the cost of these maintenance fees tends to rise each year. ARDA reported that the average cost per weekly interval for timeshare maintenance fees was $1,260 as of 2023 and is expected to continue rising.

Timeshare Foreclosure

If you stop paying your timeshare loan, you run the risk of foreclosure. During foreclosure, the lender files to take possession of the timeshare property so it can be sold at auction to cover any remaining debt you owe. 

There are two types of foreclosure: 

• Judicial Foreclosure: During a judicial foreclosure, the lender files a foreclosure lawsuit and takes you to court. Once the property has been sold, the judge may issue what’s known as a “deficiency judgment” for you to pay any remaining balance due.
• Non-Judicial Foreclosure: In a non-judicial foreclosure, your agreement authorizes the trustee to sell the timeshare in the event you stop paying your loan. You will receive an official Notice of Default and a Notice of Sale, and the lender will sell the timeshare at an auction.

What Happens if Your Timeshare Goes Out of Business?

When the economics of a resort goes bad, there’s not much a team of lawyers can do about it — unless there’s a suspicion of fraud involved. When legacy resorts run out of money — whether due to self-inflicted wounds such as mismanagement or double-digit delinquencies caused by owners who die or drop out — they usually quietly fold.

What Are the Consequences of Not Paying a Timeshare?

When you walk away from a timeshare agreement, you forfeit your vacation ownership rights and leave yourself open to legal issues. Abandoning your ownership breaks a deal and puts you at risk of foreclosure. It also may drag your credit score down for up to seven years.

Before you stop paying the annual fees, you need to consider the results of that decision. To fully understand what happens when you abandon your timeshare, here are a few of the most frequently asked questions we receive regarding the subject:

Will the Timeshare Company Sell My Timeshare?

Essentially, yes. If you outright abandon your timeshare and refuse any further payments, the resort will make collection efforts, and you may face foreclosure. The resort then turns around and finds another buyer as a replacement. Be aware that your legal issues could linger for years while the timeshare developers get off scot-free.

Can I Get Sued for Not Paying My Timeshare?

You could end up in court if you stop paying the fees associated with your timeshare. Failing to pay your debt to a timeshare company will have you sent to a collection agency and could eventually place you in foreclosure. However, not all companies push for legal reparations and will constantly harass you with collection efforts.

Does Cancelling a Timeshare Affect My Credit?

A timeshare foreclosure can have a significant impact on your credit. Not only will your credit score likely decrease, but foreclosures can stay on your credit report for up to seven years. This credit status makes it difficult to qualify for a future mortgage or any other form of credit without high-interest rates.

How to Get Rid of Timeshare Without Ruining Credit

If you want to get out of your timeshare agreement without damaging your credit score, the last thing you want to do is stop paying for it. Getting collection agencies involved in your agreement is a quick way to damage your credit score.

5 Great Options to Get Rid of Your Timeshare

Are you tired of dealing with the hassle of timeshare companies and paying maintenance fees? If so, you’re one of many owners looking for a way out. Don’t just up and quit, though, or you’ll risk financial turmoil. Instead, check out these five great options to get rid of your timeshare:

1. Give Your Timeshare Back To The Resort: The first option is to see if the resort you purchased it from will take it back. If you’ve paid off your mortgage but want to get rid of the pesky maintenance fees, you may be able to negotiate your way out of the agreement through a timeshare deed-back program. Not all timeshare companies are so accommodating, but it is worth trying.
2. Attempt To Rent Out Your Timeshare: Typically, the timeshare industry prefers owners to keep their agreement. Hence, they often recommend owners rent out their units to cover the various fees. While it sounds good, renting out a timeshare is quite challenging.
3. Offer It On The Timeshare Resale Market: While it is possible to sell a timeshare to free yourself of the treacherous maintenance fees, don’t expect to make a profit. Truthfully, don’t expect anything in return. Many owners are so eager to get out of their imprisonment agreements that they’re willing to sell for as little as a dollar. 
4. Gift the Timeshare to Someone Else: While a timeshare may not be suitable for your living circumstances, perhaps a friend or family member is interested. Transferring the timeshare title to someone else is sometimes an option, depending on the timeshare company. Just be sure to be completely upfront with the person receiving the timeshare.
5. Timeshare Cancellation Companies: A timeshare exit company is an excellent option for those misled or deceived into an expensive purchase. These companies help you get out of the grasp of your resort and achieve financial freedom. However, be wary of timeshare scams and only work with credible cancellation companies, such as Wesley Financial Group, LLC (“WFG”).

Can I Donate My Timeshare to Charity?

Donating a timeshare to charity is sometimes easier than selling it. Plus, you feel good about the property going to a worthwhile cause. Many charity organizations will accept timeshare donations of all kinds. However, some organizations do not take them due to their annual financial obligations. Charities want to ensure they make a profit from the donation, so timeshares with little resale value are unlikely to get accepted.

If you find a charity willing to accept timeshares as donations, inquire about what that process would entail. While it may seem easy, nothing with timeshares ever is.

Bottom Line

Many people want to stop paying their timeshare fees outright. But here’s the catch, if you stop, you’ll end up in an even worse mess. So, instead, you should inquire about working with timeshare exit professionals to help steer you in the right direction.

Wesley Financial Group* is home to many cancellation experts happy to help take a look at your situation. If you need some advice, reach out to them today!