Can a resort in another country sue you in America?

Can a collections company in the US collect on a debt ?

If you quit paying maintenance fees your week will go into foreclosure affecting your credit negatively. Try to use it, trade it or sell it for $1 and offer to pay the closing fees, that’s about the best you can do to rid yourself or your albatross. Try perusing the different timeshare ad sites to see what a comparable week has sold for. When you sign on the dotted line of any contract the terms must be met or there will be consequences.

Any body can sue you. They merely have to file against you in your home country. They can also just hire a collection agency in your home country, that can come after you. This is probably what they will do in fact.

Selling a timeshare

Most owners are ready to walk away after dealing with the frustrating process of trying to sell a timeshare. Some may have difficulty coming to terms with the loss they need to take in order to sell a timeshare. Most timeshares sell in the resale market for 50% or less than the original purchase price. Still motivated to sell your timeshare? Read through our resale category for advice on selling timeshares.

Donating a timeshare

Donating a timeshare may be your best opportunity to produce a positive outcome from a negative situation. Timeshare donations work on a simple concept: The donation company will purchase your timeshare at a bargain price, resell the timeshare, and give a portion of the profit to a charity. Still interested in donating a timeshare? Read our article on donating a timeshare.

Walking away

So what will happen if you simply stop paying the maintenance fees? Will it affect your credit? The answer to both is, it depends. The process for recovering unpaid maintenance fees and/or taxes on a deeded property can be much different than a right-to-use contract. Laws and regulations also vary depending on the location of the timeshare.

Given the many variables our best advice for anyone considering walking away from a timeshare is to contact a lawyer. A decent lawyer can review your contract and provide a suggested course of action. The thought of throwing more money at the problem may sound depressing however money spent on a lawyer would be a wise investment in the problem, and it may be more affordable than you think. The advice of a lawyer may help you avoid damaging your credit.

Your last option is to just stop paying the maintenance fees, taxes, special assessment fees, and collection fees. This approach will most likely result in damaged credit. Deeded timeshares will eventually result in a foreclosure, or a deed-in-lieu. A foreclosure will affect your credit, even if it was a deed-in-lieu. I am not aware of any laws or regulations that require a creditor to report a deed-in-lieu, and you may have some wiggle room to negotiate with the creditor how it is reported, but the success rate of this approach is limited to none. Make sure you understand your tax obligations when pursuing a deed-in-lieu or a short sale. In the US a creditor will write off the debt and the IRS will treat the forgiven debt as income. The creditor will send a 1099-c to both you and the IRS when they write off a debt.

If your timeshare is not a deeded ownership then you most likely own a right-to-use and/or points based timeshare. Walking away from a right-to-use timeshare contract is similar to walking away from a cell phone contract. There is no asset for the resort to recover due to unpaid fees however they can pursue the collection of unpaid fees that are defined in the terms of the contract. Your unpaid fees will most likely be sold to a collections agency. Collection agencies take pride in their ability to upset your daily life through phone calls to both you and relatives, threatening mail, and in some cases legal action.

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The annual maintenance fee is established by the timeshare management company, either the developer or the HOA. New properties still managed by the developer tend to have lower fees. Most developers want to keep the fees low in order to keep costs down for the initial buyers.

You should expect to pay at least $815/year in maintenance fees.  You could pay more than the $815 average depending on the property, and depending on what is defined in your contract. Review your timeshare contract thoroughly to understand your financial obligations.

Be prepared to pay special assessment fees, in additional to your annual maintenance fees. Special assessment fees can be levied at any time due to unforeseen events. A common example of an unforeseen event is hurricane damage that exceeds the payout of the insurance company.

If you understand your costs, and budget properly, you should not have any problem paying the fees. Owners that cannot pay the fees should investigate the option of either donating the timeshare or the option of a quick claim deed to the property management. If a quick claim deed offer is not accepted, and donating does not pan out, then you can sell your property for one dollar and have the new owner assume the maintenance fees.