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Timeshare foreclosure has serious consequences for consumers. Here’s what can happen as a result of a foreclosure.
Timeshare foreclosure happens when a timeshare owner fails to make payments on their timeshare. It can also happen if you fail to pay your maintenance fees or special assessments. Your lender or the resort will take legal steps to take back your timeshare. Foreclosure has serious implications for your credit and beyond.
When foreclosures are reported to the major credit bureaus, they become part of your credit history. They will stay on your credit report for 7 years. And typically, foreclosures have a substantial impact on your credit score. Each bureau weighs foreclosures differently. And the other unique features of your credit history make it impossible to say exactly how much your score will drop. But it’s certain that it will fall, often by around 100 points, according to FICO. It may take as much as 7-10 years for your score to fully recover from the impact of foreclosure.
Foreclosures can make it difficult to impossible for you to get future credit. The low score caused by your foreclosure is one of the top considerations your lender will use in deciding to extend credit to you. Plus, lenders will be more wary of foreclosures than of other factors. For example, if your low score were caused by multiple inquiries, a lender might overlook that. But when you have clearly failed to pay your debts, lenders will see you as a big risk. It’s much harder to overlook a foreclosure.
Poor credit history can also cause other problems for you. Landlords and prospective employers will often require your credit report before renting to you or hiring you. They may see a foreclosure on your report as a sign of irresponsibility or a bad risk.
Foreclosure may also put you at risk for a deficiency judgement in some states. Deficiency judgments happen when the lender is unable to recoup the amount of your debt through the sale of the property. For example, if you owned $10,000 on your timeshare but your lender was only able to resell it for $7,500, then you could face a deficiency judgment of $2,500. However, not all states allow for this. And not all lenders will seek a deficiency judgment.
Clearly, the consequences of timeshare foreclosure are serious. So it makes sense to avoid it. The best way to avoid foreclosure is not to buy a timeshare at all! However, if it’s too late for that, you can choose timeshare cancellation and avoid foreclosure. The timeshare exit process can be complicated, but we can help. We specialize in assisting consumers to get out of the unwanted timeshare contracts. Contact us today to see how we can help you get out now.
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