Does a Deed-in-Lieu of Foreclosure on a Timeshare Affect Credit?

by Russell Huebsch ; Updated July 27, 2017

Some timeshares fall in value so much that the owner sells the property for nothing, and others may try to give the deed back to the developer -- called a deed-in-lieu of foreclosure. While a deed-in-lieu may get you out of a property, you may destroy your credit rating in the process. On the other hand, a deed-in-lieu can save your credit rating.

Timeshare Mortgage

A deed-in-lieu of foreclosure will affect your credit rating if you have a timeshare mortgage, because the lender -- often the timeshare developer -- usually reports to the credit bureaus that you did not repay the loan in full. A deed-in-lieu takes 80 to 160 points off of a FICO score of 780, and even more for higher scores, according to Les Christie of CNN.

No Mortgage

A deed-in-lieu may avert damage to your credit score if you do not have a mortgage. If you have unpaid dues, the timeshare company will eventually sell the debt to a collection agency or sue you, both of which will destroy your credit rating. If you work out a deal to exchange the property to pay the debt, you can avoid a negative account on your record.

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Considerations

Timeshare companies do not always report a deed-in-lieu to the credit bureaus. For example, you may have a lawyer negotiate with the timeshare company to agree to not report the account to the bureaus. However, you must get the the timeshare company to agree to not report the deed-in-lieu in writing. You have no leverage once you complete the deed transfer.

Tip

You probably have options other than a deed-in-lieu that may protect your credit score. For instance, you can trade vacation weeks with timeshare owners at other properties. You can even exchange ownership of the properties. Some charities take timeshares if they think they can sell the property for a quick profit. You can take a charitable deduction on your taxes worth the fair market value of the property or whatever it sells for.

References

About the Author

Russell Huebsch has written freelance articles covering a range of topics from basketball to politics in print and online publications. He graduated from Baylor University in 2009 with a Bachelor of Arts degree in political science.

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mineral rights in mississippipenny stocks etradespelling of bank chequehow to convert euros to dollars formulasan bernardino grantor granteestates with lowest taxes for retireespanamanian real estatestandard deviation capmletter of intent to graduate schoolstock delistingtax deduction for child careis 696 credit score goodohp income guidelinesnc statute of limitations on debtw 4 married filing separatelyw2 box 14 code s125wa state quit claim deedhomeowner association dueswhats the highest possible credit scorehow to pay off a vehicle loan fasterdisallow definitionhow long does a cheque stay validhow long do hard inquiries stay on your credit reporttrustor meaninghow much does it cost to reverse a tubal ligationhow do i qualify for a hud homeinterpretation of comparative balance sheetfha loan and foreclosure ruleswho pays hospital bills for uninsuredtypes of financial instrumentshumana gold plansblank deposit slipstatute of limitations arkansasput call parity exampleindiana state refund statusdefine deed restrictionscan you deduct home improvements on taxeswww adp totalpay card comhow invest in stock market beginneravm abbreviationscanning credit cards in walletlowes paybilldisadvantage of barteringdifference between trustee and beneficiaryvanilla reload 800 numbersalvation army toy giveawaygarnishment priorityspot rate calculation formulapork belly stocksdefinition of delinquent accountetrade for penny stocksminnesota ebt cardwhole life insurance advantages and disadvantagescash back credit cards taxable incomedyslexia scholarshipssalvation army southern divisionaaa visa rewardsa debit to an asset account indicatesradio djs salary401k growth calculatorwhat does oasdi stand forunreported incomesan antonio womens shelterillinois food stamp applicationself directed profit sharing planhow to calculate unit trustretirement annuity fund definitionexamples of 501c3 organizationsdo unpaid medical bills affect your creditmobile home vin number lookuptrustor and trustee