Timeshares can wreak havoc on your financial situation. When you initially signed up and purchased the timeshare, you had visions of taking great vacations and making memories with your family. In the end, however, the whole experience turned into a financial nightmare and has become a major point of stress in your life.
In some cases, the situation might even reach the point of going through a timeshare foreclosure. When that happens, your credit report is sure to take a serious hit. If this has happened to you, take a look at the article below for some information on how you can approach this issue and what to do moving forward.
Why a Timeshare Goes into Foreclosure
You might find your timeshare in foreclosure for the same reason that your home could go into the foreclosure process – a failure to pay. If you simply stop making payments on your timeshare and ignore the letters and warnings from the timeshare company, you will likely end up in foreclosure at some point.
This is a potential issue if you have used a loan to purchase your timeshare in the first place. When that loan goes unpaid, the foreclosure process is the path that the lender will take to address the situation. And, if the foreclosure goes through, you will soon see a major hit to your credit report.
But it’s not only a matter of paying on the loan that might have been used to purchase the timeshare. Additionally, you’ll need to keep paying the maintenance fees over time to keep your timeshare account current. If you fall too far behind on those fees, you can again be facing a foreclosure situation. Depending on the timeshare you own and the details of your account, the annual maintenance fees – along with any assessments – can be significant. It will be tempting to skip those payments in favor of spending the money on other things in life. Unfortunately, that will lead to foreclosure down the line, and the impact of that even on your financial life can be significant.
Understanding the Damage
Without a doubt, the damage to your credit report when the foreclosure is reported will be significant. Most likely, your score is going to fall at least 100 points, if not more. And, remember that your score will already have been going down as a result of the missed payments that led up to the foreclosure, so you could be left with a credit situation that is far from desirable.
It’s not only the size of the credit drop that you should be concerned with, but also the duration. It can take at least seven years, and maybe as many as ten, to get your credit all the way back to where it was before this event. That extended damage is one of the primary reasons to take this situation so seriously. Anything you can do to get a timeshare foreclosure off of your credit report, or to prevent it from landing there in the first place, is worth pursuing.
Start with a Careful Review
As a starting point, you will want to secure a copy of your credit report from the three major credit bureaus in the U.S. Those are TransUnion, Experian, and Equifax. You are entitled to a free report annually from these agencies, so go through the steps to get those reports and then look over them carefully.
What you are looking for here are any signs of errors that should be corrected. You can file a dispute directly with the credit bureau if you find something that doesn’t seem right, and they are obligated by law to investigate the situation and make the necessary corrections. The dispute you file could be related directly to the foreclosure process with your timeshare, or it could be something else on the report that is wrong. Either way, winning one of these disputes will help to bring your credit score up.
If you are going to file a dispute, you’ll want to take the time necessary to build your case and present all of the information that you have that supports your side of the argument. For example, if your timeshare company has reported a foreclosure on your timeshare but you have documentation that indicates such an event shouldn’t have happened, turn that information over immediately. Perhaps the timeshare company filed the foreclosure sooner than they said they would, or maybe you made a payment that wasn’t credited properly. Mistakes are relatively common in these kinds of matters, so don’t just assume that everything is correct.
Work with the Timeshare Company
After you have reviewed your credit report, you might need to reach out to the timeshare company directly to see if you can work anything out that will result in the foreclosure being removed from your credit history. While there is certainly no guarantee of getting a good outcome from this approach, it’s important to take this step and see if they will work with you.
For instance, if you explain the circumstances that led up to the foreclosure, and express a willingness to work through the issue, they might have some offers or programs available to help. This doesn’t mean that you’ll get off the hook entirely for your timeshare, of course, but you might be able to agree to some kind of payment system or arrangement that will let you save your credit. At this point, it’s a good idea to prioritize your credit and you can worry later about a way to finally get rid of the timeshare once and for all.
When you reach out to the timeshare company to talk about the options, you might be offered a settlement. The company would likely prefer to receive some money on your account rather than nothing, so offering a settlement could be in their best interest. Remember, this isn’t like traditional real estate, where they will be able to turn around and sell the foreclosed property. Your timeshare ownership has essentially no value, so they’d like to get some payment on it before you go away for good.
If you do agree to a settlement, make sure the settlement agreement directly states that any foreclosure reporting will be removed from your credit. This is critical, and you can’t be too careful in terms of getting everything in writing from the start. While it won’t be offered in all situations, a settlement might prove to be a good way to get out of this sticky situation with minimal damage.
Get Professional Help
If you can’t find a way to remove your foreclosure from your credit report, you might want to enlist the help of a professional group to deal with your credit problems. Such a service – whether it’s a company that specializes in credit repair or a general financial advisor – can provide you with direction and may have some tools to help you work back toward a better situation.
Of course, you want to be careful as you enter into an agreement with such an organization, as money is likely already tight and you don’t want to commit more funds to a service that won’t wind up delivering the results you need in the end. Have a clear conversation about what you can expect them to deliver and seek some form of guarantee before agreeing to retain their services.
Start to Rebuild
At some point, you will have done all that you can do in terms of addressing the foreclosure that may have landed on your credit report. Whatever the outcome of that process may be, the next step is to look ahead and see what you can do to start slowly but surely moving your credit back in the right direction.
The fundamentals of building your credit at this point are no different than at any other time. It all starts with only taking on a reasonable amount of debt and making your payments on time, every time. If you can maintain some open credit – a credit card that is not maxed out, for example – that will reflect well on your credit situation, as it will show that you aren’t stretched completely thin. If you are currently carrying a load of debt, work on paying that down by going over the minimum payments each month, if at all possible. It may take longer than you would like, but you can slowly restore your credit by focusing on the fundamentals and leaving this messy timeshare situation behind you.
Avoid the Foreclosure Outcome
If you haven’t yet been through a foreclosure process on your timeshare, get started today on getting rid of that ownership before foreclosure becomes a reality. Use the live chat feature here on our site for more information or reach out to us directly at 833-416-8796. There are options that may be able to help you avoid the credit harm of a foreclosure, but it’s up to you to take the first step. We hope to hear from you soon!