Timeshare Settlement

A timeshare allows a buyer the right to use a property – usually part of a resort – every year for a specified period of time. A deeded timeshare involves purchasing a portion of the property; a non-deeded timeshare involves leasing the right to use the property for a contracted number of years, usually ranging from ten to fifty years.

In basic terms, buying a timeshare involves pre-paying for vacation accommodations rather than paying for a hotel room, resort space or vacation home. Make no mistake – timeshares are a huge business. According to the Association of Vacation Owners, the size of the annual timeshare market is $9.2 billion, with 9.2 million American households owning some form of timeshare.

However, the economics of buying and owning a timeshare do not always work out in favor of the owner. The typical timeshare cost will vary according to resort location, unit size, time of year, amenities provided, etc., but according to the American Resort Development Association, in 2017, the average timeshare cost was $22,180 – and that’s before average mandatory annual maintenance fees of $980 and associated interest expenses over the life of the financing.

While timeshare ownership does allow for annual lifetime visits to a resort property – tastes and personal/financial circumstances do inevitably change over the years – and a large majority of timeshare buyers end up regretting their ownership decision and seeking timeshare debt relief. In fact, research conducted by Dr. Amy Gregory of the University of Central Florida indicates that a staggering 85% of all timeshare buyers ultimately regret their purchasing decision.

The all-too-common refrain, “Cancel My Timeshare!,” gives rise to several questions that will be addressed throughout the balance of this article.

It is perfectly legal to dispose of a timeshare by selling it – it’s just nearly impossible to get back anything close to what you may have paid for it! A quick scan of eBay includes more than a few timeshares listed on the secondary market at giveaway prices.

Apart from eBay and CraigsList, websites including Redweek.com and Timeshare Users Group https://tug2.net/ offer classified ads to their users. Some timeshare developers offer buyback programs – though at predictably low prices – since timeshares rarely sell for more than 15% of their original price.

Nevertheless, a quick sale will eliminate annual maintenance charges while putting a dent in any remaining loan payments on the property, providing some degree of timeshare debt relief. Finally, some real estate brokers specialize in timeshare resales – but avoid those who charge large upfront fees. Reputable brokers make their money on commissions following the sale, not before.

Selling a timeshare when money is still owed on a timeshare mortgage can be a challenge. Therefore, determine whether the loan attached to your timeshare is a personal loan or a mortgage loan secured by the property. If the timeshare loan is a personal loan, it does not have to be paid off before selling the timeshare.

Simply apply all funds received from the timeshare sale to the timeshare loan and any remaining balance will be treated as an unsecured loan. In many instances, timeshare owners will try to give away the timeshare (as is the case in many of the eBay listings above) simply to avoid the recurring annual maintenance fee.

In the case of a timeshare loan being a timeshare mortgage, some lenders will allow a “short-sale” when the mortgage balance is greater than the value of the timeshare, converting any remaining balance into an unsecured loan. Consult your lender for further details.

Falling seriously delinquent on timeshare finance payments and allowing a finance company to foreclose on the property will often lead to collection fees, missed payment fees, accumulated interest expense and damage to a credit score and profile.

A timeshare foreclosure will have significant negative impact on the ability to secure another mortgage for up to seven years. The better, less expensive, less burdensome choice is to work with your lender to find a solution. Be aware that many timeshare management companies require that maintenance fees be current before allowing any transference of timeshare ownership.

When a timeshare buyer quickly realizes that the purchase was a mistake, there is a recission period during which the timeshare can be cancelled – but this period lasts only three to fifteen days from the purchase date, depending upon the state. After that, available options include refinancing, timeshare debt settlement with a modification of terms based on documented financial hardship, and in extreme cases – bankruptcy.

Filing for Chapter 7 or Chapter 13 bankruptcy can suspend collection activity and erase timeshare debt, but this form of timeshare settlement comes with significant long-term damage to a credit score and profile.

Consider contacting the owners of the adjacent weeks to your timeshare (the weeks immediately before and after your ownership week), as they may be interested in acquiring a longer, consecutive stay without incurring additional travel costs. A final option worthy of investigation is timeshareexitteam.com, a consumer protection organization that helps timeshare owners rid themselves of unwanted timeshare contracts.
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