The Ramifications of Not Paying Timeshare Fees

Starting to think your timeshare wasn’t the best possible investment? Sorry, but you’re correct on that one, as timeshares are notoriously unprofitable. They cost way too much at the beginning and require sizable loans that cost you money in the far future by accruing interest. Even if you never stay there, you’re obligated to pay regular maintenance fees that can increase each year beyond what you originally negotiated for. And, sorry to tell you this, but whatever money you spend on a timeshare today (and usually over the course of 10 to 15 years) is money you could have used for other investments. Finally, and perhaps more annoyingly—it’s not like an actual second home. You only get to use your timeshare at a certain time of year in a certain place, so hopefully, you like the location enough to have no flexibility in your vacation plans for years to come.

Well then, why not just walk away, abandon the property, and never let it cross your mind again? Hold on there, because that can leave you open to a slew of financial, legal, and other issues. To help you prepare for your next step, here’s a semi-comprehensive list of the ramifications of not paying timeshare fees. Keep them in mind before you do something you might regret.

How It All Begins

Let’s say you stop paying for your timeshare and its assorted fees. The first thing the management company will do is get in touch with you to let you know you’re behind in payments. First, they’ll contact you by mail, and then by phone. If you choose to start paying again, all well and good, but you may owe interest, late fees, and other penalties for your lateness on top of what you’re already contractually obligated to pay. More than likely, the company will be willing to work out a payment plan, a loan deferral, or a similar arrangement at this point, depending on your previous payment history. Some may even understand if you’re going through a rough patch and try to give you a break. But make no mistake—all will insist on receiving what they’re legally due in the end.

But What if You Refuse To Pay Even Then?

After some time, the management company may take the step of engaging a collection agency. The agency may be independent or another division of the company. They will increase their efforts to get you to pay and have the means to be a little more forceful about it. You will receive multiple calls and letters, and while they may still offer ways to pay off your debt, you probably won’t get as good of a deal as before. Also, and more importantly, your credit score will drop, and a note that you had to deal with a collection agency will appear on credit reports. Even if you pay for everything at this point, your financial reputation can take a big hit for the next seven years. If you’re much older and not making as much money as you used to, the management company may not go after you, but that doesn't mean your heirs won’t be forced to take over your debt if you willed the timeshare to them or named them on the deed. Either way, walking away is never that easy.

They’ll See You in Court

Let’s say the company doesn’t give you a pass. They can now bring you to court, where you can plead your case (incurring whatever legal fees are required in hiring a lawyer, filing paperwork, and so forth.) You might win or make a deal, but the worst-case scenario is that the judge will find for the management company and award a money judgment to them. Your wages can be garnished, or a levy can be placed on your bank accounts, ordering your bank to freeze your account and pay the company with whatever funds are there. And yes, again—your credit score will be negatively affected.

Foretelling Foreclosure

If at last, the management company cannot collect from you, they have the option of pursuing foreclosure. Foreclosure means they can take the property and put it up for auction in order to attempt to recoup their losses. But you, as the debtor, aren’t out of the woods yet. If the company doesn’t make enough during the auction to recover your debt, they may request a deficiency judgment. This means you’re still obligated to pay the remaining debt until it’s paid back in full. Your credit score really takes a hit now, and it can even affect your chances of obtaining any future mortgages. You asked about the ramifications of not paying timeshare fees. Well, there you have it, and they’re best avoided.

So, Can This All Be Avoided?

Yes, but obviously, the surest way is to make your payments and never default. This doesn’t make the inconvenience and debt of your timeshare and its fees any easier, of course, but at least you’ll avoid having your credit report dinged and falling further into debt. If you’re committed to getting rid of your timeshare, however, there are various means and methods. You could sell it, of course, but with all their issues, timeshares are notoriously hard to unload. Also, while renting the space might—and that’s a big might—allow you to break even, you’re still giving up your vacation spot for that week. Some people consider giving the timeshare back to the management company, but that's not very likely. On occasion, companies are open to letting a client walk away—for a price. For that negotiation, you’ll want to enlist the services of a lawyer or other advocate.

You can also explore the possibility of working with timeshare cancel services like Preferred Cancellation Services. As we state on our FAQ page, we are not a resale, transfer, or donation company, but instead, we are a consumer advocate service. When you hire us, we work to release you from your obligation to your timeshare within 12 months. Review our site and consider all the above while you decide how to proceed, and please contact us if you have questions about our services.