Skip to content

What Happens When You Default on a Timeshare

Step 1 of 6
canceltimesharegeek

Defaulting on a timeshare is a situation no owner wants to face, but financial constraints or dissatisfaction with ownership can lead to missed payments. Understanding the implications of defaulting and knowing your options can help you navigate this challenging situation. Here, we break down the process, consequences, and recovery strategies to ensure you’re informed and prepared. At CancelTimeshareGeek, we specialize in guiding timeshare owners toward effective solutions to timeshare challenges.



Understanding Timeshare Default: What It Means


Defaulting on a timeshare occurs when you fail to meet the payment obligations outlined in your contract. This may include missing monthly mortgage payments, annual maintenance fees, or special assessments.



  • Payment Structure: Timeshare owners typically pay monthly installments for the property and annual maintenance fees for upkeep.

  • Default Trigger: A missed payment can lead to default after a grace period, depending on the terms of your agreement.

  • Contractual Obligations: Defaulting violates the terms of your contract, giving the timeshare company the right to take action.


Recognizing the financial commitment before signing a timeshare agreement is crucial to avoiding this situation.

Step 1 of 6

Consequences of Defaulting on Timeshare Payments


Defaulting on your timeshare payments can have serious repercussions, both financial and legal.



  • Late Fees and Penalties: Timeshare companies often charge late fees, increasing your financial burden.

  • Collection Efforts: After default, the resort may involve collection agencies to recover the debt.

  • Legal Action: If unpaid balances persist, the timeshare company may pursue legal action to recover costs.

  • Loss of Ownership: In severe cases, the resort may terminate your ownership rights.


These consequences highlight the importance of addressing payment issues promptly.



How Defaulting Affects Your Credit Score


Your credit score plays a significant role in your financial health, and defaulting on a timeshare can negatively impact it.



  • Delinquency Reports: Timeshare companies report missed payments to credit bureaus, lowering your credit score.

  • Long-Term Impact: Negative marks remain on your credit report for up to seven years, affecting loan approvals and interest rates.

  • Difficulty in Renting or Selling: A poor credit score can hinder future financial opportunities.


Regular communication with the timeshare company can sometimes prevent reporting to credit agencies.

To learn more, please check out our featured Timeshare Exit Companies.

Can the Resort Foreclose on Your Timeshare?


Foreclosure is a legal process where the resort reclaims the property due to unpaid debts. This process varies by contract and state laws.



  • Judicial Foreclosure: Requires a court order and is more time-consuming.

  • Non-Judicial Foreclosure: Faster and often specified in the contract.

  • Impact on Credit: Foreclosures significantly damage credit scores, similar to mortgage foreclosures.


Foreclosure can also lead to additional legal costs, further complicating your financial situation.



Legal Actions Timeshare Companies May Take


If you default, the timeshare company has legal avenues to recover the owed amount.



  • Debt Collection Lawsuits: The company can sue for unpaid amounts plus legal fees.

  • Deficiency Judgments: After foreclosure, the company may pursue the remaining balance if the property sale doesn’t cover the debt.

  • Wage Garnishment: Courts may allow garnishment of wages to recover funds.


Legal proceedings can be stressful and costly, underscoring the need for proactive solutions.

Alternatives to Defaulting on a Timeshare


If you’re struggling with payments, consider alternatives before defaulting to minimize long-term consequences.



  • Negotiate with the Resort: Request a payment plan or temporary deferral.

  • Rent Out Your Timeshare: Generate income to cover payments by renting to other travelers.

  • Sell the Timeshare: Use resale platforms to transfer ownership and eliminate obligations.

  • Work with a Timeshare Exit Company: Professionals like CancelTimeshareGeek specialize in helping owners cancel timeshare contracts legally.


Exploring these options early can prevent default and its repercussions.

Cancel Your Timeshare. Start with a Free Consultation!

Step 1 of 6

How to Recover After a Timeshare Default


If you’ve already defaulted, there are steps you can take to rebuild your financial stability and credit.



  • Settle Outstanding Debts: Negotiate a settlement with the timeshare company or collection agency.

  • Monitor Your Credit: Regularly review your credit report for errors and track improvements.

  • Rebuild Credit: Pay bills on time, reduce existing debt, and use secured credit cards to restore your credit score.

  • Seek Professional Guidance: Consult a financial advisor or timeshare expert to evaluate your next steps.


Recovery takes time, but a strategic approach can help you regain financial stability.



Picture of Karen Pena

Karen Pena

Karen Pena is an experienced and knowledgeable writer with over 10 years in the timeshare industry. She has a passion for helping people find relief from the burden of their timeshare contracts. Karen has experience in researching and exploring the latest trends in the timeshare industry to provide readers with the best advice possible. In her spare time, she enjoys spending time with her family, traveling, and reading.