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What happens if you just stop PAYING? (by Carvan A.):

JosephB

You ask what happens if you ju'st stop paying your maintenance fees. You have partially answered your own question by saying "they are hounding me now every month, adding late fees, lockout charges, etc. and my (December) 2008 week hasn't even come up yet."

Your failure to pay causes other others to pick up the slack and this is not good for other timeshare owners but sometimes bad things happen to good people and payment is not possible. If that is your case, consider the following advice.

"Hounding" by collectors is against the law. You can put a stop to it and possibly even turn the tables on the collectors if they have violated Title 15 USC Section 1692(Fair Debt Collection Practices Act - FDCA). This federal consumer protection act allows you (section 812) to collect $1,000 for each violation and "such additional damages as the court may allow". Some collection agencies knowingly violate the law as a calculated risk. These collectors are hoping that you aren’t aware of your legal rights and that you will crack under the relentless pressure of their calls and pay them. I suspect you would have paid them if you could. You should not have to suffer from constant harassment. If the debt collector’s actions are violating the law you may recover damages as well as attorney fees.

I suggest you google FDCPA and determine whether the collection agencies are violating the collection laws with respect to calls after hours or to your place of employment. I suggest you, pursuant to the FDCPA, send a certified letter to the agencies telling them to stop sending collection letters and to stop calling you. Subsequent letters and calls after your "cease and desist" letter will each constitute a violation of the law by the agency. Each violation can result in a penalty of $1,000 imposed upon the agency.

You should check your credit reports and determine whether any negative reports have been made relative to the maintenance fees. The maintenance fee debt is not a personal obligation - that is, you never signed a contract promising to pay the annual maintenance fees when you purchased the time share. If there is a ding on your credit report for the failure to pay, you should dispute the ding and demand that the resort provide proof to the credit reporting agencies that you personally signed a promise to pay the maintenance fees. You did not sign such a promise and the ding should be removed from your report within 30 days (Federal Law) unless the resort can prove you are personally liable for the debt. The opportive words are "personally liable". I know from years of exposure to the collection industry that invalid dings are often placed on your credit report but again the Fair Credit Report Act, (FCRA, 15 USC section 1681, is there for your protection and you should rely upon it to get improper dings removed.

There was a declaration filed in the county deed records by the developer before the first timeshare was sold that allows the resort or the subsequent owner's association to collect annual maintenance fees and upon your failure to pay to impose late fees, lock you out, and to ultimately foreclose to recover the property. The resorts do not like to take the foreclosre action - it is expensive for them - but they will if you continue to ignore the maintenance fees.

I suggest you send a certified letter to the resort telling them your circumstances. If your failure to pay is the result of the loss of a job, a reduction in pay, the death of a spouse, a divorce, or any valid reason tell them. Tell them you do not plan to pay the past due or future maintenance fees and that you are willing to settle the matter by giving them a quit claim deed in lieu of a foreclosure. You might even offer to pay them a sum to be negotiated between you if they agree to end the matter with a deed back. You send this by certified mail - a phone call is a waste of time unless you are buying time and plan to pay the maintenance fees in the future - and you make it clear in your letter that a deed back is all you are willing to do. It would be helpful if this letter is signed by your attorney as that will usually get a quicker response.

There is a high probability the resort will sooner or later agree to the deed back. The worse thing that can happen is a foreclosure which will adversely impact your credit report and remain on there for 10 years as a legal action against you. The foreclosure is not in the financial best interest of the resort but they may refuse a deed back and follow through with the foresclosure as a business practice to discourage defaults.

A foreclosure on your record will be harmful and it will lower your credit score and result in higher interest rates on future home and auto loans as well as consumer debts in the future. The word timeshare has a negative connotation with many people and a future credit grantor may hear you out on why the foreclosure happened and extend grace to you because it was a timeshare you could not sell or give away. Certainly it is in your best interest and that of the resort to do the deed back.

I think my recommendations are valid based on years of experience but these recommendations are not offered as legal advice and you should not take any action relating to your timeshare situation without the advice of your personal attorney.