# Does anybody know how credit bureaus evaluate timeshare contract defaults?



## wanderlust (Mar 3, 2006)

Two months ago we purchased a 2 bedroom timeshare for 28,500 at the Grand Chateau, Las Vegas after attending a sales presentation. We put ten percent down by credit card at the time.

We're now home and think its too much money, period. We enjoy the vacations and quality and stuff, its just the money. The loan has since closed and we received our first statement.

Marriott will allow us to back out. 
If we go this way we loose the deposit, and its going to show on our credit report. 
However we are told its not going to be held as bad as defaulting on a house mortgage, etc. 
Does anybody know how credit bureaus evaluate timeshare contract defaults?


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## ginsun88 (Mar 3, 2006)

wanderlust said:
			
		

> Marriott will allow us to back out.
> If we go this way we loose the deposit, and its going to show on our credit report.



This doesn't sound like Marriott is doing you any favors.  Just like any loan, you either pay or default.

Hopefully someone with the right background will weigh in with their advice, but only you can make the decision to forfeit nearly 3K and ruin your credit.  

Have you considered refinancing the loan (if you're already a homeowner, you can try for an equity loan) to get a better interest rate and lower your payments?  Maybe you can reserve a high demand week and rent it out?

As others have advised you on a previous post, try to enjoy your purchase first as you have already made that sizable deposit and since you purchased from the developer, you can really make the most of those Reward Points.

Good luck,
Grace


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## dougp26364 (Mar 3, 2006)

I'm quite sure it's going to hit your credit record as a default on your loan or a bad debt write off. Not a great thing to have on your credit score. You can write to the credit bureau's and have a statement added telling your side of the story (bought spur of the moment while on vacation et.....) and that may lessen the damage but, it will affect your score.

If this is really the way you want to go then it's probably the easiest and cheapest way to go but, it could affect your ability to get credit down the road for other purchases or affect what interest rate those purchases are made at.

Unless you just can't afford the monthly payment, I believe you're componding one mistake with another mistake. Either way you'll be paying for it for the next 7 years. At least I think that's about the amount of time it takes to pay one of Marriott's loans off and how long it will hang on your credit record.


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## gmarine (Mar 3, 2006)

dougp26364 said:
			
		

> I'm quite sure it's going to hit your credit record as a default on your loan or a bad debt write off. Not a great thing to have on your credit score. You can write to the credit bureau's and have a statement added telling your side of the story (bought spur of the moment while on vacation et.....) and that may lessen the damage but, it will affect your score.
> 
> If this is really the way you want to go then it's probably the easiest and cheapest way to go but, it could affect your ability to get credit down the road for other purchases or affect what interest rate those purchases are made at.
> 
> Unless you just can't afford the monthly payment, I believe you're componding one mistake with another mistake. Either way you'll be paying for it for the next 7 years. At least I think that's about the amount of time it takes to pay one of Marriott's loans off and how long it will hang on your credit record.



I agree. It is absolutely going to affect you credit in a negative way. It will likely cause interest rates on any loan you are able to get to be higher than normal as well. Think this over carefully before you do it.


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## armlem2 (Mar 3, 2006)

If you are still considering defaulting as an option, you should request to speak to the finance dept at Marriott and inquire as to how they intend to report your actions to the bureaus.  It should show as a paid repossession or settled charge off at worst. I would want whatever they say in writing. Ask if they could fax it to you.  You may want to do all this in writing, so they respond in writing.  Marriott doesn't really have to many options if they are already reporting your loan payments/ debt to the bureaus and I willing to bet they are.  They can't report paid in full when you turn it in, their options are ethically limited.  

In doing this you will want to trade your deed for a settlement letter stating paid in full.  You would much prefer to go this way then just defaulting on your payments. Just not making payments and waiting for a default will effect your credit much worst in that you will also be dinged for the late payments until the default/settlement is processed and reported, if ever.  A lot of companies leave things open as negatives when people don't pay, thereby causing alot more grief to the defaulter.  Also much more like to have it stay longer on your report.

It will effect you credit scores negatively, though nowhere near what a mortgage does. It is treated more like an installment loan in many lenders eyes.  Having said that, it could bump you into a lower credit grade (depends on your overall credit and finances) thereby costing you more to money for credit in the future, both for secured and unsecured debt.  It will stay on your report for atleast seven years and given the poor ( and I mean poor) state of credit report agencies (not repositories - big 3) you will probably need the letter Marriott sends (if they will send you one), when applying for credit, specfically a mortgage.  That being said it is not the end of the world.   

Many have given you ideas on trying to sell you TS, but often that may cause huge lost.  One option, I have only seen a couple of times with regard to ts is trying to get someone to take over the payment for you or a fraction there of.  Find a friend split it, sell it to someone with them paying you then they won't need to come up with all the money at once.  You may even find that Marriott might go along with this.  Good Luck


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## Gadabout (Mar 3, 2006)

Will it affect your credit rating? Yes. Will it impact you negatively? It depends.

A lot of credit cards will instantly raise your interest rate if you get a credit hit. That might be a big "so what" if you always pay your card off every month. On the other hand, if you carry a balance, this will be a problem.

Insurance companies think credit problems mean you will file fraudulent claims (or so they claim). Your rates may go up, depending on if the company uses credit scores and if your state allows this.

If you are looking for a job, companies may pull a credit report. If this is your only (and I mean only) credit ding, depending on the job, they may not care. If this is a ding added to other things, and/or the job involves handling money or higher management, you might not get the job.

I don't know if existing mortgages will be raised after a ding. Read your contract. Future mortgages or other loans may find you paying extra in interest.

You might want to see if someone in your family will loan you the money if you would rather pay them than pay Marriott, and perhaps you can get a lower interest rate from them. Draw up a contract and do it right. If you're going to pay someone, wouldn't you rather pay family?

And in the meantime, see if you can rent it out if you don't plan on using it yourself.


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## merc (Mar 3, 2006)

What might happen is more related to the rest of your credit history, and how you might need credit, than anything else.  No reply has actually thus far given you any information other than conjecture.  I don't believe a timeshare default is going to be in the same universe as a mortgage default.


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## gmarine (Mar 3, 2006)

merc said:
			
		

> What might happen is more related to the rest of your credit history, and how you might need credit, than anything else.  No reply has actually thus far given you any information other than conjecture.  I don't believe a timeshare default is going to be in the same universe as a mortgage default.



Since a couple of late payments on a loan whether car, boat or otherwise, can cause havoc on future credit I would imagine that defaulting on a loan for over $20,000 will cause problems.

If you do take that route, do what Larry has said. He has given you good advice.


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## JimC (Mar 3, 2006)

Check to see if your credit card contracts allow them to significantly raise your interest rates if you default or pay late on any financial obligation.  If you don't carry a balance from month to month (which I recommend) then that is a non-issue.  The more pressing concern is whether it would trigger financial reviews that could affect their extension of credit.  They could reduce your credit line or freeze your cards.  As others have said insurance carriers may hike premiums or not renew your policies.  You really should seek legal advice about this course of action before you proceed.


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