Expert: Andreas Rossler - 11/11/2007

Question
My husband and I purchased a timeshare in Jan 2007, and we are now getting a divorce.  Neither of us can afford payments.  When purchasing, we were assured we could sell & get out without a problem, however, when I called now, Marriott wants $7000.  Also, when I tried to refuse to sign the loan docs because I felt there was chance of divorce, she assured me again that I could easily get out, and that I couldn't back out at this point.  Our loan balance is way too high to sell & I don't want to pay any more money, just to lose it.  What exactly will happen if we just let it foreclose??

Answer
Lisa,

I'm not exactly sure of the question, but let me respond.  First, based on when you purchased, you are definitely outside the cancellation period - so you are contractually bound to the agreements you signed when you purchased this timeshare.

There are two obligations - one is the loan to purchase the timeshare and one is the promise to pay the maintenance fees.  

The loan is backed by the timeshare.  If you fail to pay the loan, the usually collections procedures would start and they will eventually foreclose on the timeshare and take it back.  That is exactly how it would show up on a credit report.

The maintenance fees are more like a gym membership obligation.  Those will continue to be assessed as long as the timeshare remains in your name (plus late charges).  Eventually, they will try to collect or sell the debt to a collection agency.  It will show up on your credit in the same way that an unpaid gym membership - just a bad debt that is excessively delinquent.

You are correct, if the loan balance is high - you won't be able to sell or donate.  The only option is to find someone who will take over the payments (very unlikely), or not pay and let them foreclose.

I'm no lawyer, but it could also end up going into one spouses name - being a debt and asset obtained during the marriage.  If that is the case, to completely extricate yourself from this obligation (assuming it goes into your husband's name), you would need to quit claim the deed to him, record the quit claim in the county where your timeshare is located, get proof of recording, notify Marriott of the change in ownership.  However, this option should be discussed with a lawyer - you may still be liable on the loan - the above would definitely get you out of the obligation to pay maintenance fees.

Good Luck!