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Timeshare Default: What are the Consequences?

A timeshare default is not necessarily a bad situation for you to be in, if you own a timeshare. Though the word default has negative connotations to it, there are upsides, too, to defaulting on a timeshare. In the larger sense, the picture is more mixed, with there being both pros and cons associated with a timeshare default. The consequences depend largely on what your specific situation is, what the basis of the default is and how bad the damage of the default will be when weighed against other factors.

Consider Hits to Your Credit

If you are facing a timeshare default and it is going to impact your credit in a deleterious way, then do what you can to avoid it. However, if you have the option of a voluntary default, then by all means take it, especially when the hit to your credit score is negligible or you have a benefit you can gain as a consequence of defaulting. An example would be if you have a timeshare you do not use, yet you still pay maintenance fees on it for life. Taking a voluntary default on the property without it hurting your credit would solve said problem.

Be Wary of Defaulting on Inherited Timeshares

An inherited timeshare is self-explanatory: You come into possession of it when someone dies. Then, you are stuck with the obligation of paying the associated fees with the timeshare; in that sense, it's more of an inherited liability. While some people may think that you will be sued if you do not accept the timeshare inheritance, this is not true. It is your right to refuse the inherited timeshare, when you no longer pay, the timeshare is foreclosed on. What may still occur is if the deed is in the name of the estate and there is money there left over, they may go after it on a judgment on the note.

Loss of Down Payment

The worst possible consequence of a timeshare default is the loss of your entire down payment. This situation is also made worse by the fact that, again, your credit score may be negatively impacted if you default and you may have collection agencies calling you regularly, demanding payment. However, an upside to this situation is if you somehow find yourself in a circumstance where your adult children are on the timeshare contract, too. If you default, that rids them of the obligation to pay fees for the rest of their lives.

Fraud as Grounds for Default

If you can prove fraud or misrepresentation by the timeshare company as a means for getting yourself out of your contract, then this is the least painful and most favorable way of not paying back your obligation. There are consumer groups out there that you can find on the internet that will assist with this endeavor. All you generally have to provide them with is a copy of your contract along with your account of the irregularity between what the timeshare company told you when you entered into the contract and what you have learned since then.