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Will Terminating a Timeshare Contract Affect My Credit?

Timeshare affecting Credit Score

Can A Timeshare Ruin Your Credit?

Will getting out from under the obligations of a timeshare contract – a process that can be costly and time-consuming in and of itself – pose further harm to your credit?

Timeshares are expensive propositions, even under the best of circumstances, given the increasing importance (and cost) of points and the fact that annual maintenance fees tend to rise, year over year. In fact, we’ve seen countless stories of individuals facing severely affected credit scores as a result of their timeshare interest; as they begin to miss payments for their loans or their fees, consumers face the very real threat of having their delinquency reported as a “30-, 60- or 90-day late payment,” which can negatively impact credit.

To make matters worse, it is not unheard of for such loans to be reported to credit reporting agencies as “mortgages” – meaning that a consumer who defaults will have a “mortgage foreclosure” attached to their name, hampering their ability to purchase a home in the future.

So, all of this being said, it is not particularly revelatory to claim that buying into a timeshare interest could negatively impact your credit in the future.

Timeshare Relief and Transfer Companies

The reality is that some methods out there may actually pose a risk to consumers’ credit – or may be unattainable if a timeshare owner’s financial record is anything but spotless.

Specifically, we’re referring to certain types of third party timeshare relief and transfer companies, which our own Michael Finn breaks down in substantial depth here.

For instance, relief companies –  which are those that claim the ability to extract persons who own long-term timeshare interests from these contracts, often by means of inventory recovery agreements with resort developers – can generally offer no guarantee of success, for a variety of reasons. And while many offer “money back guarantees,” it is actually not uncommon for organizations like these to go in and out of business. What this means is that consumers, in the end, are actually left with little assurance that they’ll be able to recover what they paid to the relief company upfront – let alone get out from under the existing timeshare fees and payments that were weighing them down in the first place!

Timeshare Transfer Companies

Another type of organization, which can be called the timeshare transfer company, operates by transferring the ownership of the interest away from the owner, and over to… whom? Largely, the answer is “no asset entities” like third party corporations and LLCs; however, developers and property owners associations will no longer, generally speaking, permit transfer of title an unknown entity with no credit rating, nor to individuals who won’t agree to be credit checked as a condition of their acquisition.

What’s more, it’s important to remember that, for consumers, transfer is only viable as a method of timeshare relief when there are no mortgage or maintenance fee liens on the interest that would impair the transfer. That is to say that, if you’ve defaulted on payments already, transferring your interest may be all but impossible.

Timeshare Representation of a licensed attorney.

With all of this taken into consideration, there is a method that may help consumers successfully unburden themselves from their timeshare interest, while keeping their credit intact: Negotiating the termination of a timeshare contract with the representation of a licensed attorney.

Having a legal advocate on their side offers many practical benefits to consumers looking to walk away from their timeshare interest. First and foremost, it is only an attorney who offers the ability to review and dispute contract clauses, advance legal principles, and, if so necessary, utilize litigation effectively.

While pursuing litigation is a last resort option, it has proved effective, particularly when it comes to the matters that we’ve been discussing in this post. For instance, Finn Law Group acted as the principal law firm on a class action suit that resulted in the deletion of the harmful “foreclosure” categorization from over 11,000 individuals’ credit reports.

What’s more, it is only an attorney who can advocate for or recommend “strategic default” as a strategy for attaining leverage during a negotiation, as it is only an attorney –  and not an unlicensed third party – who may offer the legal position of insulating his or her clients from third party debt collection activities under the Fair Debt Collection Practices Act (FDCPA), which stipulates that third party debt collectors may not contact consumers who are represented by a lawyer.

It should be noted that, once the team is able to extract the client via an agreement, even with no further understanding as to undoing the damage, they have to report accurately a zero balance and an account closed status; hopefully, any hit they may face is relatively short-lived and within a year or two the client is pretty much back to where they started.

As we’ve noted before, purchasing a timeshare interest comes with long-term financial obligations, which continue to affect consumers long after their budget situations have changed or they’ve ceased taking advantage of their vacation intervals. These financial burdens can add up and cause serious damage to an individual’s credit, impacting their ability to attain a mortgage or make major purchases for years on end. Generally speaking, successfully terminating your timeshare contract is the only way to ensure that you’ll permanently be off the hook for fees and payments – and having a legal professional by your side may be an essential step in the process, particularly when other “relief” methods have failed.

Led by Attorney Michael D. Finn with 50 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don’t hesitate to drop us a line with any questions or concerns.


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