What Happens if I Stop Paying My Timeshare Maintenance Fees?

Steve Luba

November 08, 2021

Why You Should Sell Your Timeshare Instead of Defaulting on Your Payments

Maintenance fees continue to increase every year, now averaging over $1,100 per year for each week of timeshare. So, if you are wondering, “What happens if I stop paying my timeshare maintenance fees?”, you’re not alone. The thought often crosses the mind of timeshare owners but be aware that there are consequences to not paying your fees.

Why Do I Pay Timeshare Maintenance Fees?

Let’s face it – no one really likes to pay taxes or fees on something they own. But owners are contractually obligated to pay annual assessments that include property taxes and contribute to the upkeep and maintenance of the timeshare property. It is a similar concept to home ownership, but for a shared ownership property.

What Happens if I Stop Paying My Timeshare Fees?

By the time you get to this stage, you’ve already decided to divest yourself of your timeshare, but you should really sell it rather than just stop paying your timeshare maintenance fees. Not paying can lead to:

• Contact from Resort Collection Department – resorts are sure to follow up with you to find out why you have stopped paying your fees. In multiple ways – phone calls, emails, texts, even through the mail.

• Involvement of Collection Agencies – yes, those repeated, annoying phone calls that keep coming and asking you to pay up. Even demanding that you pay up, with possible threats of legal action.

• Foreclosure Process – the resort can begin foreclosure proceedings to get the timeshare back. While this may not seem important if you get out of your ownership, it can lead to a significant hit on your credit report and harm you in other ways such as getting a car loan or a refi on your mortgage.

• Legal Action – your case could end up in court and a more significant impact on your credit score. 

These areas are no fun and can be avoided if you sell your timeshare instead of defaulting on your payments. 

Foreclosing on a Timeshare?

Yes, this is possible since your timeshare is considered an asset that can be recovered by the resort in cases of non-payment. This is a double-edged sword for both the resort and the owner since resorts don’t really want to revert to this action.

Whether it is a resort or a club-based timeshare company, they don’t want to lose you as an owner, so they will do everything they can to keep you. You may want to contact them if you are in some type of financial distress to see if there is a way to spread out or defer payments. 

Foreclosing on a timeshare estate can rack up legal costs for the resort, averaging about $3,000 in legal and administrative fees. Since the resort would have already lost money on the non-payments, they really do not want to pay more just to get it back. But they will if they have to, just to get the loss off their books. You may also have to share in those legal fees if the case gets to court.

Another area is whether you have a loan on your timeshare since many owners think a foreclosure also absolves them from paying back their loan. This is not the case, since a loan on a timeshare purchase is held by a third-party finance company and you are still obligated to pay that loan off, similar to the way you would pay off a credit card obligation. Such loans are separate from the requirement to pay your annual fees to the resort and do not change in the case of a foreclosure. 

Impact on Credit

We touched on this earlier, but the effect on credit is broader than just affecting your timeshare. If a timeshare resort or management company decides to report your non-payment to the credit bureaus, it can affect your ability to:

• Obtain a credit card

• Get a car loan

• Secure a home loan

• Refinance your mortgage

• Rent a home

• Find a job

All of these areas require a background check by the company considering your request. Most of the time they run a credit check since they believe a good credit score is a sign of personal responsibility. A hit to your credit may play a role in whether you can obtain any of the above items. 

The Fair Credit Reporting Act stipulates that negative credit events come off credit reports after seven years, except in certain bankruptcy cases. They can be requested to be removed from credit reports if they are not automatically withdrawn after the seven-year period.

How to Sell a Timeshare that is Paid Off?

Not paying maintenance fees can affect a timeshare owner’s ability to sell whether they have paid off their timeshare property or still have a loan on the original purchase. Resorts and management companies will not approve the sale of a timeshare estate if there are fees owed on the timeshare, considering it a type of lien against the property. 

Fees need to be paid in full before a timeshare can be sold, so it is best to be up to date on your fees before even putting your timeshare on the resale market.

What to Do Now?

By now, we have answered your question, “What happens if I stop paying my timeshare maintenance fees?” but you are probably still wondering where to go from here. This is where Sell a Timeshare can help.

Selling your timeshare is always a better option than risking the loss of your timeshare with no compensation, or a blow to your credit score. You can recover some of your original purchase price, rather than have nothing to show for it.

Our team has over two decades of experience in the timeshare resale marketplace, so leverage our online marketing tactics to give yourself the best chance to sell on the resale market. 

Download our process overview to learn how it all works.