Timeshares can be opportunities to enjoy vacation property by owning a partial interest with others. However, when you get behind in paying for your timeshare, you may be subject to a foreclosure process that can take your interest away.
There are two primary forms of timeshares:
- A deeded interest in property where you have actual ownership; and
- A right-to-use interest that provides the right to access and use the property but you do not actually own the property.
A foreclosure can occur when you fail to make timely payments over a period of time. When a foreclosure occurs, the company that has the loan on the property can move to take the property. If the company is successful in foreclosing on the property, it could damage your credit score making it difficult for you to obtain new loans or lines of credit in the future.
- What Options are Available to Avoid a Timeshare Foreclosure?
- How Can I Sell My Timeshare to Avoid a Foreclosure?
- How Can I Donate my Timeshare to Avoid a Foreclosure?
- How Can I Negotiate with My Timeshare Company to Avoid a Timeshare Foreclosure?
- What is a Deed in Lieu of Foreclosure and How Can I Use it to Avoid a Timeshare Foreclosure?
- What are Timeshare Rescue Scams and How Can They Hurt Me?
- Should I Consult a Lawyer About My Timeshare Foreclosure Problem?
Depending on your goal, there are different ways to deal with a pending foreclosure or to avoid a foreclosure from occurring. You should take into consideration if your goal is to get out of owning the timeshare altogether or to keep or maintain the property.
The following are some ways to avoid a timeshare foreclosure:
- Sell the property interest to another person or entity;
- Donate your property interest to a non-profit or charity;
- Negotiate with your timeshare company to avoid the foreclosure; or
- Offer the deed of the timeshare in lieu of foreclosure.
Selling, donating and offering the deed in lieu of foreclosure all involve you releasing your interest in the timeshare; it will no longer be yours. Negotiating may be an option to get rid of the property or to keep it and continue to use your timeshare.
Find a new buyer. You can also talk to your timeshare company and see if they have any potential new buyers interested in your property. It is important to note that most timeshares are not profitable, however, if your property is in a popular and in demand location, selling could produce a profit.
It is also possible to sell the timeshare property even at a loss. Selling at a loss may reduce the amount you owe to a payoff amount you can pay and avoid the negative credit implications of a foreclosure.
If you are in a situation in which you own the property outright but have trouble paying the tax assessments, you may be able to donate the property to a qualifying charity. You will have to catch up on the assessments but you should be able to take a tax deduction after donation and avoid future assessments which can avoid the foreclosure.
Please note that many charities will not want to take on a timeshare even when donated so you may have to search for a willing charity.
Neither you nor the timeshare company or bank that loaned the amount for the timeshare want a foreclosure. So, that gives both sides an incentive to negotiate to avoid the property going into foreclosure. Possible solutions include:
- Negotiating a forbearance which could give you several months where you do not have to pay while you look for other options or money to catch up;
- You can also talk to the timeshare company or resort about reducing the amount you owe; and/or
- Negotiating with the bank or timeshare company for a reduced payment plan. Getting a new lower payment may help you stay on top of timely payments rather than falling behind.
- However, watch out for bigger fees or increased interest. This strategy may also have a longer payment plan than you originally bargained for.
A deed in lieu of foreclosure may be accepted by the bank or timeshare company as a way to obtain the title of the property instead of foreclosing. This deed back process is typically voluntary on the part of the bank or resort; they do not have to take the deed back instead of foreclosing.
You may have to show that this deed back is more beneficial to them than pursuing a foreclosure in order to get them to take the deed in lieu of foreclosure.
Some scam companies may contact you in order to get money from you with fake promises of getting you out of your timeshare debt. If you decide to use a third party company to help you deal with a foreclosure or to sell your timeshare check with the Better Business Bureau to see what their rating is and do your own research online to see if they are a legitimate business.
Yes, if you are facing foreclosure you should speak to a foreclosure attorney. They can review your specific situation and advise you of all your legal options and responsibilities.