What happens when you stop paying on your timeshare:
When you first bought your timeshare it was probably very easy to get financing for the purchase. The finance counselor probably made it sound too good to be true and that the payments would be no problem.
After the first few months of making your timeshare loan payments and the excitement has worn off of the vacation, the reality of the monthly payment hits you. It is not as affordable as you thought and other things have to be paid for out of your monthly budget. And you ask yourself, What if I stop paying on my timeshare? After all it is tempting now since the timeshare is far away, your day to day life is as expensive as ever and you are more concerned about the here and now!
If you stop paying for your timeshare within the first two months you’ll start getting calls from the finance company who holds the loan (Notice of Default). They will be just like any other bill collector asking you to pay right then and now! Three or four months down the road you may get a warning letter telling you what they plan to do if you don’t pay up and catch up on the monthly notes (Notice of Default and Sale – they sell your timeshare).
After that there are two possible options: Nonjudicial foreclosure or judicial foreclosure – going through the court process.
Every state is a little different in the way that they handle judicial foreclosures of timeshare.
A nonjudicial foreclosure only requires the loan company to post and publish a notice of sale due to default. The following states allow the nonjudicial foreclosure on timeshare: Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia (sometimes), Georgia, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico (sometimes), North Carolina, Oklahoma (unless homeowner requests judicial), Oregon, Rhode Island, South Dakota (unless homeowner requests judicial), Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wyoming.
Once the timeshare is out of your name the maintenance fees are no longer your responsibility. Neither are the loan payments. However, the consequences of your stopping timeshare payments kick in – damaging your credit.
If you had a below average credit score before this, its effect will be noticeable but not dramatic.
If you had excellent credit before this, your credit score may drop 100 points or more.
Will the timeshare lender report the late payments and foreclosure to the credit agencies? Maybe so. Maybe not. But the fact of the foreclosure is a matter of public record and future loans will take that into account.
If the timeshare foreclosure shows up on your credit report it could take up to 7 years before you can get certain kinds of loans or credit cards.
It is also common practice for employers to run a report to check your credit. It would depend on the nature of the job on whether or not the foreclosure makes any difference.
What happens when you stop paying on your timeshare?
More than most people expected!
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