What Happens If I Stop Paying My Timeshare?
We’ve all been there. Overcome with the frustration of paying for something we know isn’t worth it. Timeshares can be, at their worst, a huge strain on finances. Timeshare maintenance fees seem to always increase, while the value of what you’re getting in return stays the same or declines with age. So, we understand if you’re wondering, “What happens if I stop paying my timeshare in Florida?”
The temptation to stop paying, especially if you feel like you can’t afford it, is huge. It would be so nice if you could just walk away and never have to deal with it ever again.
I mean, all that would happen if you stop paying for your timeshare is that you wouldn’t be able to use it again, right? No sweat off your back, you’re probably thinking. The place could sink into the ocean, and you wouldn’t mind, after everything you’ve been through with it.
People come into timeshare ownership in several ways. Some of them involve unscrupulous sales tactics, pressure-filled presentations, and promises that were never kept.
However you came to own your timeshare, we get it, now you want out. But is stopping payment on your timeshare contract a good idea?
Loan Payments vs. Maintenance Fees
First, we need to make a distinction around what you’re not paying.
- Maintenance Fees – These are fees you pay to help cover worker salaries, landscaping, cleaning, and other upkeeps. They generally go up in line with inflation. Some timeshare companies don’t report maintenance fee obligations to credit reporting agencies.
- Loan Fees – If you purchased a timeshare in a deeded property, then you may have taken out a loan for the purchase. The loan has a term and an interest rate that you pay just like a mortgage for your home. These are typically reported to major credit reporting agencies.
Timeshare Companies Want You to Pay No Matter What
It needs to be said, that timeshare companies aren’t stupid. They know exactly what they are doing when they sell these expensive products to people who often can’t afford them. They also know that most people won’t get good value for what they are paying.
So, it’s understandable why so many people want to stop paying for their timeshare in Florida and other places as well. But don’t make the mistake of thinking that when you stop paying a timeshare company is just going to walk away.
There are reasons timeshare contracts are so restrictive. They want to keep you in at all costs. If you stop paying, they are going to do whatever they legally can to make you pay your fees.
What Happens When You Stop Paying
For people wondering, “What happens if I stop paying my timeshare in Florida?” here’s a guide to what you can expect.
- Step 1 – You can expect some sort of communication from the timeshare company. Every month, thousands of people are late on their maintenance fees. Just like any car dealership, bank, or mobile phone provider, people are late all of the time. Typically, form letters or emails go out once you are 1-5 days late on a payment. You’ll get something in the mail politely asking you to make a payment to catch you up. Maybe they figure you just forgot to pay.
- Step 2 – Once you go over a month late, then things start to escalate. You’re usually moved into the collections department at the timeshare company. Representatives will start calling you and asking about the payments.Thankfully, there are a lot of laws around how often a company can contact you about late fees. They can harass you, certainly, but only so much.
- Step 3 – Your timeshare company will keep ramping up pressure with mailers, phone calls, emails, and other communications the further you go into default. At some point, though, usually past the 6-month mark, they’ll sell your account to a collections agency.
- Step 4 – Collections agencies are smaller outfits that aren’t concerned as much about regulations. They don’t have a large company with a brand or reputation at stake. These companies buy the balance on your account for pennies on the dollar.They know most people aren’t going to pay at this point, so they are willing to push things even harder when they get you on the phone.
- Step 5 – Calls from collections agencies can go on for years as your account and what’s owed are passed around on the secondary debt market. The regularity of the calls will drop the further out you go, but they’ll still happen.
What Happens If I Stop Paying My Timeshare in Florida? — The Impact on Your Credit
While the idea of not paying and getting phone calls every day for a while isn’t fun, that’s something most people can handle, especially when they know they’re dealing with a company pushing inferior products.
However, people who stop paying timeshare fees or loan payments have more to worry about. As you wonder, “What happens if I stop paying my timeshare in Florida?” you need to understand how it’s going to impact your credit score.
If you’re unfamiliar with credit scores, they’re a score that three reporting agencies use to assign you a credit profile. Banks, landlords, car dealerships, and all types of other companies use these credit reports and scores to know how safe it is to lend money out.
People with lower credit scores have to pay higher interest rates or get denied loans all of the time. Higher credit scores get you in the door on deals and keep your costs lower because the bank has more confidence that you’ll repay whatever they lend you.
When you stop paying your timeshare, the default will likely be reported to the credit agencies. Your credit score will drop and the next time you go out to finance a car or rent a new apartment, expect some trouble. There are, however, ways that you can stop paying without ruining your credit.
Also, if the owed debt is sold to a collections agency, that debt is called a charge-off. Charge-offs can stay on your credit report for years and impact you long after you’re free from your timeshare.
Your Timeshare Company Can Sell Your Timeshare at Auction
Of course, your timeshare company probably isn’t going to sit and wait for months until they take action. Yes, they’ll keep trying to get paid because that’s their business. But once you’re late for a few months, they can start moving to take your timeshare away.
Timeshare companies in Florida will move to foreclose on your timeshare once you pass a certain default threshold. Foreclosure allows them to seize the property and remove your name from it. Then, they can sell it at auction or sell it to a new buyer they pressure into a sales presentation.
Good Options for People Who Want to Stop Paying
Not paying timeshare fees anymore may be the only option for some people. Sometimes there is no workaround. People lose their jobs, a loved one dies, medical expenses and other circumstances can make paying impossible.
If you own a deeded timeshare outright, or if your timeshare is located in a high-desire area, then you could be leaving money on the table.
Thankfully, there are timeshare industry experts with years of experience helping owners get money back and out of their timeshares for good. These teams know how to negotiate with timeshare companies, and they know what you can expect in terms of repayment agreements and how much your property can fetch in a sale.
A good timeshare exit company can negotiate with the timeshare developer to get you out of your unwanted obligation with minimal cost and impact on your credit score. Here are some of the ways they can help.
- Option 1 – Selling Your Timeshare – With the right team helping out, you can find a willing buyer ready to take your timeshare off your hands. Every year, thousands of timeshares are sold on the secondary market.
- Option 2 – Handing the Timeshare Back to the Developer – Some timeshare companies are more willing to work with owners than others. The process of trying to collect on a late account can be expensive. If you frame the conversation correctly, they can make arrangements for handing back ownership without having to go through all of the mess.
- Option 3 – Donating Your Timeshare – Sometimes giving away your timeshare to a company is a quick way to get a tax write-off and wash your hands clean of the timeshare. Several charities are willing to take timeshare donations in kind and handle all logistics around a sale.
There are other options, so the best idea is to find a timeshare exit company with a good track record and positive reviews. They’ll help you work out some strategies to get you out and save you money.