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.

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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sensor lights for indoorsfree tax prep for seniorstaxes 1000 dollar lottery ticketplant based protein powder walmartwhy my mastercard declinedindiana state refund statuswhats the highest possible credit scorechecking account chexsystemsfafsa off campus housingirs form 3115 exampleally financial auto payoff addressmrt economicshow to apply for medicaid in south carolinatax brackets per paycheckaetna dmo benefitshud-1a settlement statementconcerta couponsohio identity theftmastercard vanilla check balanceadvantages of soleproprietorshiphow to withdraw money from ebt cardaes student loandonate clothes to homelessmarian university tuitioncalculate modified durationssi and life insurancekohls credit card credit scorefind unclaimed money in texas for freehow to recover lost savings bondsexperian contact live personsimple ira vs roth ira716 credit scoreaverage fafsa amountdifference between hmo and posmoneychimp tax bracketsrotary club dues tax deductiblesynonym withdrawnmoneygram deposit to bank accountohio lottery classic lotto numberswhat stock exchange is walmart listed onga ebt customer serviceconcessionary meaninghow long does a deed in lieu of foreclosure take401k lossesscholarship for 4.0 gpaticker symbol for at&tiowa statute of limitations on debtcalculate texas sales taxget all 3 fico scoresold navy visa credit card customer serviceallowance for doubtful accounts calculationcalculate federal tax withholdingcan you get auto insurance with a learners permitfannie mae fha loanwells fargo atm withdrawal limit per daydifference between angel investors and venture capitalisttaxes lottery winningscapital gains tax rate home salewhat do appraisers look for when appraising your hometax deduction for disabled childcashing us treasury checksfia cardmember servicesev ebitda valuationalimony and palimonystopmailwhat is a guarantorstaxes on 401k withdrawal calculatorin state tuition for dc residentshow to transfer money into wells fargo accountmaximum withdrawal from wells fargo atmnon qualified annuity withdrawal taxationrevocable living trust formsubprime merchandise cardwhat is prospectus and its contentscoupon bond calculator present value
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