Probably the primary concern of timeshare owners who cannot get rid of their timeshare is what impact their failure to pay their fees or annual assessments will have on their credit rating. Their second concern is the amount of liability exposure they have for not paying their assessments and any related penalties.
Because timeshare laws are based on state rather than federal law, it becomes necessary to review the law of each state in which the timeshare is located. At the end of this page, we will be adding links to all fifty state statutes and, if they have a timeshare law, that specific section.
As for the primary concern regarding a negative affect on one’s credit, it should be fairly clear that any unpaid debt may be reported to a credit agency. The three main credit bureaus or agencies in America are Equifax, Experian, and TransUnion. If you have never looked at your credit report, you should contact each of these agencies for a free copy each year.
The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. It will be worth you time and effort for you to obtain those credit reports just to see what mistakes have been made in regard to your credit.
How far back does a credit report go?
It depends on the type of negative information. Here’s the basic breakdown of how long different types of negative information will remain on your credit report:
∙ Late payments: 7 years
∙ Bankruptcies: 7 years for completed Chapter 13 bankruptcies and 10 years for Chapter 7 bankruptcies.
∙ Foreclosures: 7 years
∙ Collections: Generally, about 7 years, depending on the age of the debt being collected.
∙ Public Record: Generally 7 years, although unpaid tax liens can remain indefinitely.
Unpaid assessments and fees would fall into the category of Late Payments. As long as you own your timeshare, those unpaid amounts are associated with you and are considered yours. For the most part, a resort will cease to report a former owner as being responsible for unpaid assessments. However, we have experienced occasions where the resort reported the unpaid assessments to the credit reporting agencies even after the timeshare ownership had been transferred out of that persons name. Upon receiving a letter explaining that the timeshare was no longer owned by the individual who the resort claimed owed the past assessments, the credit reporting agency removed those negative entries from the individual’s credit report.
Another valid concern is something referred to as a deficiency. If a timeshare ownership is foreclosed, usually, a judgment is entered for the amount of the unpaid assessments, fees, court costs, etc., If the buyer at the foreclosure sale does not bid up to or in excess of that judgment, the shortfall is referred to as a deficiency. The concern then is whether the resort can sue the owner for the deficiency and get a judgment for that amount. Fortunately, some states have “Anti-Deficiency Laws” or laws that prohibit deficiency judgments and protect borrowers from having to pay a lender for losses following a foreclosure sale. This gets into legal technicalities that may require a consultation with an attorney licensed to practice law in that state jurisdiction. However, some non-definitive information can be found on the Internet.