Timeshare maintenance fees and credit scores

Do timeshare maintenance fees, specifically their non payment, affect credit ratings?

Maintenance fees

Timeshare resorts have overheads: Staff have to be paid, lights have to be kept on, pools need cleaning and apartments have to be renovated. No members would disagree that these costs need to be covered by them.

Contention arises where annual fees begin as a nominal amount to cover costs, but creep up every year until they are as expensive as ordinary accommodation of the same standard.

Unlike other holidaymakers timeshare owners are committed to paying those costs every single year. So now, for many owners their membership no longer confers any kind of advantage.

These fees are seen more and more as a burden, and members are looking for ways to escape.

Some people (generally advised by strangers on the internet) opt for the notion that if they stop paying their maintenance fees, the resort will be forced to cancel their contract, thereby freeing them from their future obligations.

Can you stop paying?

For current members generally the answer is no. Not if you want to avoid legal action and protect your credit score.

The resort has a legally binding contract with each member which obligates them (the resort) to provide annual 'rotational occupancy' for a jointly agreed amount of time. The same contract obliges the member to make annual payments, whether they holiday or not.

In addition the resort may increase those annual costs at their discretion and the member is legally bound to pay whatever they are invoiced.

People who stop paying the fees will be contacted initially by the resort. If the defaulting member does not pay, or communicate, then the debt may be passed to debt collection specialists such as agencies or solicitors.

At this point, the member would also be legally liable for the extra cost incurred by the resort in collecting the money as well as the maintenance fees themselves.

The parties engaged to collect the maintenance fee debt will have legal debt enforcement avenues at their disposal, up to and including enforced bankruptcy. If the process reaches court proceedings, you should expect your credit rating to take a severe hit.

There is no way around it. If you don't pay your maintenance fees, the resort can escalate until you have no choice. And the longer you leave it, the more it could cost you in fees and charges.

When you CAN stop paying

If you sell or otherwise legally divest yourself of the ownership, then your liabilities end at the point of transfer and maintenance payments can be discontinued safely.

Unfortunately both of the above avenues are easier said than done. There is practically no market for second hand timeshares (even when advertised for £1 on Ebay). Today's consumer simply gets a better deal from regular holiday booking sites, even to stay in actual timeshare resorts. Nobody wants the expense and commitment of outdated holiday membership schemes.

"Timeshare companies are averse to giving up their income stream of annual fees," notes Andrew Cooper, CEO of European Consumer Claims, "whether a member is happy or not."

In most cases, expert help is needed to prise free from a timeshare contract.

When you retain specialists to relinquish your timeshare, you need to continue maintenance fee payments until officially advised otherwise by your representatives. This could be a few weeks later, it could be months or a year later.

In some cases you may be advised that you are entitled to claim compensation due to infringements in the way you were sold your membership. If so, concurrent to the claim, the legal team will be prioritising your release from further financial obligations towards your timeshare.

On the initial consultation call you will be given expected timeframes before making your decision of whether or not to retain experts to help you.

To find out more, get in touch with our team at ECC.