Can A Timeshare Be Foreclosed On?

Learn all about timeshare and foreclosure today, so you can understand the process and make sure to keep your vacation ownership in good standing.

Can a Timeshare be Foreclosed On?

The short answer is “yes.” When you take out a mortgage loan for a timeshare purchase, you sign an agreement to make monthly payments on the timeshare until the debt is completely paid off (generally for a period of 10 or 15 years). Just like any other mortgage payment, it’s extremely important to maintain your payment schedule on your timeshare and not to fall behind on any timeshare mortgage payments and assessments. Simply stated, if you stop making payments on your timeshare loan, you will eventually face foreclosure since a timeshare is considered real property just like a residence (note that the other owners of the timeshare property are not affected in any way by the foreclosure of your interest in the property). In addition, even if you have paid off your timeshare loan, but for one reason or another stop paying your maintenance fees and other related costs, you are likely to face foreclosure on your timeshare as well. In fact, not paying maintenance fees on your timeshare is essentially treated the same way as not making payments on your timeshare mortgage.

Understanding the Process of Timeshare Foreclosure

If you fail to make timely timeshare mortgage payments over a certain period of time or have stopped paying your maintenance fees altogether as outlined above, your timeshare could eventually be foreclosed on. What is the timeshare foreclosure process? Foreclosure is a legal process that involves the timeshare company going to court for breach of contract to get a lien on your timeshare if you should default in the payment of your timeshare loan, as well as any other costs, fees and assessments associated with the specific timeshare in question. Be aware that the foreclosure process for timeshares varies from state to state since timeshares are governed by state law. For example, in 2010 Florida passed a timeshare foreclosure law that shortened the amount of time needed to process a timeshare foreclosure from 18 months to just 90 days. However, in other states, the foreclosure process could still take up to a year or more.

Note that state law often outlines the requirements for how and when timeshare liens can be foreclosed. For example, the timeshare company can foreclose on the lien either through judicial foreclosure (Florida, for instance, is a judicial state) or a nonjudicial or out-of-court process based on state law and the terms outlined in the specific timeshare declaration. (In order to learn more about your state’s specific laws governing timeshare foreclosures, take time to research and review the state’s statutes.)

Why You Definitely Want to Avoid a Timeshare Foreclosure

Understand that a timeshare foreclosure, similar to a residential foreclosure, could lead to serious negative financial consequences. In fact, a timeshare foreclosure goes into your credit history and can have a significant impact on your financial situation for years to come. Here are some of the main reasons why you don’t want to go through a timeshare foreclosure and why you should seek out other alternatives to the foreclosing on your timeshare if possible:

  • A timeshare foreclosure will negatively affect your credit score (in some cases, by as much as 100 points or more depending on your individual situation). A timeshare foreclosure appears on your credit report for seven years in addition to any entries about previous collection efforts regarding the timeshare.

  • A timeshare foreclosure could also have a negative impact on our ability to obtain any other type of mortgage for up to seven years in many (but not all) cases.

  • A timeshare foreclosure could lead to higher interest rates than prevailing market rates on credit cards or car loans, as well as to the denial of loans in general such as personal loans, lines of credit and other types of loans.

  • A timeshare foreclosure could lead to a reduction in credit lines (or in extreme cases even to your lender choosing to close your account altogether), as well as an increase in insurance premiums, due to receiving a poor credit rating that results from the timeshare foreclosure process.

  • A timeshare foreclosure may result in additional taxes since the Internal Revenue Service (IRS) requires forgiven debt to be incorporated into your taxable income unless you happen to qualify for an exception or exclusion. Cancellation of Debt income is reported to the IRS on your annual income taxes via a 1099-C tax form. Make sure that you research and understand the tax ramifications of a timeshare foreclosure and how a foreclosure could potentially affect your annual income taxes.

  • A timeshare foreclosure could possibly affect your job search. Believe it or not, federal law allows employers to run a credit report on potential employees, so a timeshare foreclosure could actually affect your ability to find employment. Only 11 states have enacted laws to limit the use of employment credit checks on potential employees – California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington.

Investigate Your Options Through the Westgate Legacy Program

If you are struggling with your timeshare mortgage payment or facing an imminent foreclosure on your timeshare, consider researching all of your available options. For example, the Westgate Legacy Program has been specifically designed to help assist owners discover safe and secure exit options based on their individual circumstances and timeshare ownership. In fact, timeshare foreclosure is potentially avoidable altogether if you reach out to the Westgate Legacy Program – the only developer-guaranteed release option.

The Westgate Legacy Program will work directly with you to discuss all of the various alternatives you can pursue to avoid timeshare foreclosure by helping to determine the best solution for your individual situation. The representatives of the Westgate Legacy Program will expertly walk you through all your available alternatives. Call the Westgate Legacy Program today to discuss options available specifically to your account and assistance to facilitate a better outcome than timeshare foreclosure if possible. (Note that Westgate Resorts is not affiliated with any third-party companies and the Westgate Legacy Program works directly with owners to find solutions to foreclosure.)

For more information regarding The Legacy Program, or to reach out to us to discuss your options (in the event of an owner's passing), please call 800-351-0461, Monday through Friday from 9 a.m. to 5 p.m. Eastern Time.

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* This article is not intended as a substitue for professional, legal advice. We are not attorneys and this article is not intended to give legal counsel in any way, shape or form. If you have further questions about your specific situaton, you may want to seek the advice of a competent attorney that specializes in these areas of practice.