What happens if you default on a timeshare?
I have a timeshare that a can no longer afford to pay for. The financial services department of the resort says it will count as a foreclosure and is very bad for my credit. Is this just what they say to get you to pay? What’s the worst that can happen?
2 things will happen.
1. The foreclosure will be visible on your credit history. Lenders will take it into consideration that you didn’t pay a debt before loaning you additional money. You will either not get the new loan or will pay a much higher interest rate.
2. The timeshare lender will report the foreclosure to the IRS. They will show the amount of money that was still owed at the time of the foreclosure as well as the value of the property at the time it was sold.
Let’s say you paid $10,000 for the timeshare, had a remaining balance of $8000 and the timeshare is now wroth $4000. For tax purposes you have a $4000 non-deductible loss (timeshares are personal use property) and a $4000 cancellation of debt income. If you are not insolvent or bankrupt, the $4000 will be added to your income in the year of the foreclosure as "other income." (The loan is considered separately from the property so the $4000 loss doesn’t reduce the COD income at all.)
Related posts:
- Timeshare donation company asking for personal info….anyone out there who donated their TS?
- How can we transfer a timeshare to another family member?
- How can I get rid of timeshare property fast? Is the foreclosure damage the same as on a house?
- How easy is it to rent a timeshare for a least the maintenance charges?
Tagged with: Buying Timeshare • renting timeshare • Selling Timeshare • Timeshare info
Filed under: Timeshare News
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2 things will happen.
1. The foreclosure will be visible on your credit history. Lenders will take it into consideration that you didn’t pay a debt before loaning you additional money. You will either not get the new loan or will pay a much higher interest rate.
2. The timeshare lender will report the foreclosure to the IRS. They will show the amount of money that was still owed at the time of the foreclosure as well as the value of the property at the time it was sold.
Let’s say you paid $10,000 for the timeshare, had a remaining balance of $8000 and the timeshare is now wroth $4000. For tax purposes you have a $4000 non-deductible loss (timeshares are personal use property) and a $4000 cancellation of debt income. If you are not insolvent or bankrupt, the $4000 will be added to your income in the year of the foreclosure as "other income." (The loan is considered separately from the property so the $4000 loss doesn’t reduce the COD income at all.)
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yes if you do default it will affect your credit. If you can not longer afford it I suggest you try selling it. If it does hurt your credit dont worry my best friend had lost her house and it hurt her credit alot. She regained credit soon after and now she has a great score (above a 700), and the house thing happend only 2 yrs ago. I hope this helps. Good luck
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Yes, it’s a foreclosure. You will lose any money you have invested so far including any deposit. You will also owe payments until the date it is foreclosed upon and there will be no auction to mitigate this, as the resort will just resell your share.
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Your credit score will be drastically effected.
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sell it
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