[ 2018 ] Is One's Credit Rating Affected by Defaulting on a Mexican Timeshare Purchase?

[buzglyd]

I’m done responding here. Bill knows everything. I know nothing.

 

[davidvel]

Since there is no judgment in Mexico (in all of the above examples), the enforceability of the non-existent judgment is irrelevant.

The question (with no definitive answer yet) is, if a Mexican business has affiliates, or management, or debt collectors in the U.S., can they report to credit reporting agencies CRA?

The Fair Debt Collection Practices Act has provisions that apply to debt collectors reporting debts to CRA on behalf of creditors they represent. So it's clear they can report.

I haven't found anything that says the creditor must be U.S. based, but am still looking. So far, I mark this question as possibly yes, but still need more info. There may be federal regs that apply.

 

[easyrider]

Here is an example of how this works. It looks like a debtor can be sued in the country where the debt was incurred and under certain conditions you could be required to show up. I doubt that timeshare debt falls under a condition that would force a person through international treaty to show up in court in a different country.

Really, for Americans anyway, our Mexican timeshare contracts are only considered " Right to Use" meaning they are not deeded. Basically what you sign is more of a promissory note and not a deeded mortgage contract. A promissory note is basically an IOU. There is nothing to foreclose on.

Bill

International Law Attorney | Houston, TX

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• Posted on Mar 26, 2017

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The owner of the debt may be able to sue you in the jurisdiction in question , but in order to enforce the judgement here they would have to show that there you had notice and an opportunity to be heard; United States jurisdictions will generally not enforce any judgement obtained in absentia (i.e.without you being there or at least having been properly served here). If they serve you though international treaty you will be in court there. I think a lot will depend on how much you owe and whether it's worth their while to try to collect it. Also, even if they are successful and they can enforce the judgement here, your state may not allow them to touch many of your assets. I think you should consult an international lawyer in your area so all this is fully explained to you, and you can decide what course of action to take.

The use of notes may also be a matter of local practice. In some cross-border credit transactions (particularly those involving Latin American borrowers), local law may require that loans to a borrower located in a foreign country be evidenced by a note in the local language that is governed by local law even where the foreign borrower is a party to a separate credit agreement governed by the laws of a United States jurisdiction

The rtu contract that I cancelled in Mexico was written in English, not Spanish. Technically, to be enforceable in Mexico, the rtu contract would have to written in Spanish.

So what it looks like to me is these rtu's from Mexico are unsecured promissory notes that would be very hard to collect when the buyer lives in the USA if that buyer decided to stop payment. If the note was sold to a collection agency that agency would need to get a judgement in a US Court to enforce that note to ding a credit report. Any collection notation on a credit report could be disputed by the debtor until the collection agency gets a judgement. The problem is that foreign judgments are not enforceable in the USA and the buyer isn't required to go to a Mexican Court in most circumstances.

Bill

 

[easyrider]

I’m done responding here. Bill knows everything. I know nothing.

You know , providing a link that supports your statement is a bit more meaningful that just spouting out what you think. I hope your not upset that I would like proof of what you claim. Upsetting anyone here isn't my intent. I would really like to know how a Mexican timeshare company can legally go the distance regarding collections.

Bill

 

[easyrider]

From the looks of it, international debt with the exception of some fines or penalties in some places does not follow a person back to the USA. A company in Mexico , like a timeshare seller, does not have the ability to report to cra's (credit reporting agencies like Equifax ). The Mexican timeshare sellers can hire management companies in the USA to collect mf's and call a person that is no longer making payments. Resortcom.com is one such company. All Resortcom can do is call and send a letter to let the overdue account holder know that according to their records there are payments lacking. At this point the debtor can say prove it or I dispute that and Resortcom would report back to the Mexican company owning the debt.

Many timeshare contracts in Mexico have discrepancies , mistakes , unfulfilled actions and outright lies which make most of them easy to get out of and very hard for the seller to enforce when the buyer is from another country, imo.

https://www.thestreet.com/story/12789658/1/credit-qa-can-overseas-debts-affect-my-score.html

Q: When I left Iceland after living there for two years, I left a credit card with an outstanding balance. Will that affect my credit in the states? – Greg, Brooklyn


A: In most cases, any international debts you may have incurred while overseas won’t be held against you in the states.


“International and U.S. credit files are maintained separately, as each country has different credit-related regulations and laws,” Demitra Wilson, a spokesperson for Equifax, tells MainStreet.

https://corporate.resortcom.com/timeshare-financial-services/

In-House, Modern Delinquency Solutions

Our collections department – a team of multilingual professionals sensitive to diverse customs and business practices – strengthens, streamlines, and improves the performance of collection practices and procedures, expands the options offered to members in delinquency, and ensures continuous cash flow and the retention of long-term member relationships. Our state-of-the-art timeshare management software, ResortConnect, supports multiple currencies, making our collection activity dynamic, agile, and efficient.

There is information in this Federal Reserve pdf that suggests there are many rules regarding collections and reporting to cra's.

https://www.federalreserve.gov/pubs/bulletin/2003/0203lead.pdf

s. Loans extended by individuals, employers, insurance companies, and foreign entities typically are not reported.

I actually do know a golfer who stopped making mf payments on a Mexican timeshare. He is an attorney and all he did was call and said he is done because they took out his golf privileges and he decided to go elsewhere. So far, maybe 2 1/2 years now, not a word from the resort.

Bill

 

[Iggyearl]

I actually do know a golfer who stopped making mf payments on a Mexican timeshare. He is an attorney and all he did was call and said he is done because they took out his golf privileges and he decided to go elsewhere. So far, maybe 2 1/2 years now, not a word from the resort.

Par for the course...........

 

[easyrider]

Par for the course...........

That is funny !!!

 

[Karen G]

Finally we have a "real life" experience of what happened to someone who stopped making their maintenance fees on a Mexican timeshare: https://tugbbs.com/forums/index.php...act-some-company-to-exit-my-timeshare.274216/

 

[bankr63]

Finally we have a "real life" experience of what happened to someone who stopped making their maintenance fees on a Mexican timeshare: https://tugbbs.com/forums/index.php...act-some-company-to-exit-my-timeshare.274216/

I was hoping that someone would provide real experience and not just a lot of theory.

I do know that my FIL walked away from a Mexican timeshare many years ago with apparently no deleterious consequences; he claims to have "just stopped paying" and after a couple of years "they just stopped asking". Now he just uses our excess TPUs instead. I don't have enough information to post knowledgeably on his full situation, and it would be a MX to CA action, so of little interest to the argument here and probably wouldn't answer your original question Karen.

 

[buzglyd]

I was hoping that someone would provide real experience and not just a lot of theory.

I do know that my FIL walked away from a Mexican timeshare many years ago with apparently no deleterious consequences; he claims to have "just stopped paying" and after a couple of years "they just stopped asking". Now he just uses our excess TPUs instead. I don't have enough information to post knowledgeably on his full situation, and it would be a MX to CA action, so of little interest to the argument here and probably wouldn't answer your original question Karen.

In most cases if you've already paid off the loan or have paid most of it, the Mexican TS isn't going to chase maintenance fees when they can just take it back. However, a Mexican TS could assign the debt to a US collection agency and that agency could attempt to collect and report it to the credit agencies if that is part of their policy. THEY DO NOT NEED A JUDGMENT TO DO THIS.

So yes it can happen but that doesn't mean it will happen. If a debtor disputes it, the agency just has to provide verification of debt (signed contract, etc.).

 

[easyrider]

In most cases if you've already paid off the loan or have paid most of it, the Mexican TS isn't going to chase maintenance fees when they can just take it back. However, a Mexican TS could assign the debt to a US collection agency and that agency could attempt to collect and report it to the credit agencies if that is part of their policy. THEY DO NOT NEED A JUDGMENT TO DO THIS.

So yes it can happen but that doesn't mean it will happen. If a debtor disputes it, the agency just has to provide verification of debt (signed contract, etc.).

I wonder how exactly they can do this ? Collection agencies in the USA, from the links I provided, seem to be regulated and only chase debt from the USA. Maybe an International debt collection agency could pursue the debt but they would have to follow the Fair Credit Act and the Fair Debt Collection Practices Act. To use an American based collection agency the collection agency would need to verify the debt is a legal debt. I'm not seeing how they can verify this when it is international debt.

https://www.ecfr.gov/cgi-bin/text-i...true&tpl=/ecfrbrowse/Title16/16CIsubchapF.tpl

https://www.ftc.gov/enforcement/rul...dings/fair-debt-collection-practices-act-text

"""
§ 809. Validation of debts
(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing --

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) Disputed debts
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor. """"

 

[buzglyd]

It says verification of debt OR judgement. If your name is on a signed purchase and sale agreement, that is verification of debt.

 

[davidvel]

I wonder how exactly they can do this ? Collection agencies in the USA, from the links I provided, seem to be regulated and only chase debt from the USA. Maybe an International debt collection agency could pursue the debt but they would have to follow the Fair Credit Act and the Fair Debt Collection Practices Act. To use an American based collection agency the collection agency would need to verify the debt is a legal debt. I'm not seeing how they can verify this when it is international debt.

https://www.ecfr.gov/cgi-bin/text-i...true&tpl=/ecfrbrowse/Title16/16CIsubchapF.tpl

https://www.ftc.gov/enforcement/rul...dings/fair-debt-collection-practices-act-text

"""
§ 809. Validation of debts
(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing --

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) Disputed debts
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor. """"

I have dealt with these issues (debt collection) in my practice for decades. We can debate this forever, but debt collection is a different issue than reporting delinquencies to a credit reporting agency.
This is the distinction you have missing throughout this thread.

The FDCPA does not directly regulate reporting to CRA. You can be a day late and they can report you. You don't need a judgment to get a ding on your credit report. These are completely separate issues.

Again, I don't know if a U.S. CRA will report such info for a debt, but the lines are clearly blurred when you mix in that these entities are U.S. based and have agreements with the CRA to report derogatory info.

 

[easyrider]

I have dealt with these issues (debt collection) in my practice for decades. We can debate this forever, but debt collection is a different issue than reporting delinquencies to a credit reporting agency.
This is the distinction you have missing throughout this thread.

The FDCPA does not directly regulate reporting to CRA. You can be a day late and they can report you. You don't need a judgment to get a ding on your credit report. These are completely separate issues.

Again, I don't know if a U.S. CRA will report such info for a debt, but the lines are clearly blurred when you mix in that these entities are U.S. based and have agreements with the CRA to report derogatory info.

This was addressed elsewhere in this thread. To report a delinquent account to "ding" a credit score the company holding the debt has to belong to a CRA like Eqifax. Many retailers and financial institutions in the USA are members of the CRA's and can report you to the CRA's for non-payment and "ding" your credit score. When a company holding the debt does not belong to the CRA's they can use a "bill collection agency" but the debt needs to be verified. The debt is verified in court where a judgement is given.

If this were otherwise, anyone could report anyone for anything.

A timeshare bought in Mexico is an unsecured debt that has many problems with obtaining a judgement from a Mexican Court including the fact that the contract is usually in English for Americans and they need to be in Spanish. There is no way to get a judgement in the USA because it is International debt.

International companies are not members of the CRA's. International companies can't enforce a judgement from their country in the USA and would have many problems trying to obtain a judgement in the USA. I provided links in this thread to back these statements up.

Another interesting dealio is how problematic it is for International Debt Collectors to collect in other countries. According to the pdf I am linking below, the USA is one of the hardest countries to collect international debt.

http://www.eulerhermes.com/mediacen...-International-Debt-Collection-1213-dec14.pdf

"UNITEDSTATES + The payment culture of domestic companies is becoming uncertain and, in the absence of a harmonized framework on late payments, payment terms remain a mere contractual issue and the average DSO would tend to be excessive. + The court system is complexified by a federal structure in which ownership protection mechanisms are not recognized and where no simplified proceedings are available to settle the simplest files. As a result,significant delays and costs must be expected whilst enforcement may be difficult. + When the debtor become sinsolvent, collecting debt becomes a complex task. First, the bankruptcy system remains pro-debtor and, although it is often said that making a company insolvent is a significant way to obtain payment, in practice bankruptcy reorganization is resource-draining. In addition, most states protect the debtors' personal assets and there is therefore a possibility for a corporate bankruptcy to be listed as“no asset” cases. This means that after liquidating the debts, the likelihood of any distribution to creditors is zero."

 

[CherBear]

Yes. Pueblo Bonito reported our friends and they are fighting to get it removed. Although the resort is in Mexico, the contract was done through a U.S. operation. We also cancelled our contract, but I fought over the amount to keep it off our credit. Total nightmare & precious time wasted fighting them. Our friends wrote a letter to the 3 credit bureaus explaining the dispute, but unfortunately it is still showing as

 

[oldxr]

Wife had a Mexican time share she stopped paying on .Nothing ever showed up on her credit .In modern times you never know what will pop up on your credit report .probably best to keep an eye on it .If you stop paying the maintenance fee and they resell it again they made more money then if you kept it.I think they figured that out .

 

[skimeup]

I have an experience with Royal Holiday that might be relevant. RH is a Mexican Timeshare company (HQ in Mexico) and owns multiple properties there. It now sells only points I believe but it used to sell weeks. I purchase two RH weeks from a tug member because RH also has contracts with other timeshares and hotels in multiple places around the globe. I purchased the weeks in order to use the Manhattan properties at a ridiculously low rate (some $500 per week MF plus NYC tax when one is staying there). Then they threw in another $60 per night for certain cities and it was almost like my MF was doubled. I stopped paying because it was cheaper to use RH points. So in sum, company headquartered in Mexico, resale weeks purchased through tug, I stopped paying. It went to collection in 2014 or so and is still on my credit report. Two weeks, two dings. I changed phone numbers because they also made harassing phone calls.

The good news is that it doesn't seem to have harmed my credit score much and they haven't bothered to try to enforce payment in court. I see there is debate about whether they could do that but I can't imagine the cost and court time would be much of a payoff for them.

Not initiating a debate on RH. They do have an awful rep for deceptive/pressure sales in Mexico but that is not why I use them and I am happy with what I do with them.

 

[davidvel]

I have an experience with Royal Holiday that might be relevant. RH is a Mexican Timeshare company (HQ in Mexico) and owns multiple properties there. It now sells only points I believe but it used to sell weeks. I purchase two RH weeks from a tug member because RH also has contracts with other timeshares and hotels in multiple places around the globe. I purchased the weeks in order to use the Manhattan properties at a ridiculously low rate (some $500 per week MF plus NYC tax when one is staying there). Then they threw in another $60 per night for certain cities and it was almost like my MF was doubled. I stopped paying because it was cheaper to use RH points. So in sum, company headquartered in Mexico, resale weeks purchased through tug, I stopped paying. It went to collection in 2014 or so and is still on my credit report. Two weeks, two dings. I changed phone numbers because they also made harassing phone calls.

The good news is that it doesn't seem to have harmed my credit score much and they haven't bothered to try to enforce payment in court. I see there is debate about whether they could do that but I can't imagine the cost and court time would be much of a payoff for them.

Not initiating a debate on RH. They do have an awful rep for deceptive/pressure sales in Mexico but that is not why I use them and I am happy with what I do with them.

This can't be true. Easyrider has quoted lots of links to webpages about judgments, etc. and has definitively stated that collection agencies, despite their affiliation with the 3 credit bureaus cannot report foreign debt to them. You must have read the wrong credit report. (Sarcasm)

 

[buzglyd]

Ha! Posting links and ignoring parts of them is a skill!

 

[RodgerKing]

That would be great info to have, but may be difficult to obtain. The vast majority of folks who default are first time buyers, and after the default they have no reason to hang around TUG.

Jim

No. They can't turn it over to a US collection agency without first getting a judgement in the USA. The debt was inured in a different country and the USA does not enforce foreign judgments. I left the link for this twice in the thread.

Bill

I can tell you my experience with defaulting on timeshares. I purchased 13 timeshares out of Bankruptcy Court for 10 cents on the dollar, thinking I could sell them for 15 cents on the dollar. When I discovered my mistake ( they are worth about a minus $500) I just deeded them back to the Timeshare company and sent the deed to their county to have recorded. I did this about 4-5 times and I have never heard from anyone or had my credit dinged. I think they have so many defaults that just getting my unit back through no effort on their part convinced them to go after someone else, not me. The units are now out of my name and into theirs. I did this about 8 years ago and still no problem, my credit is still almost perfect.

 

[AZSadOwner]

I've defaulted on a US timeshare and my credit rating took a moderate hit for 3 months, then went back up again !

 

[easyrider]

This can't be true. Easyrider has quoted lots of links to webpages about judgments, etc. and has definitively stated that collection agencies, despite their affiliation with the 3 credit bureaus cannot report foreign debt to them. You must have read the wrong credit report. (Sarcasm)

Indeed, I have quoted links that suggest that the consumer reporting agencies in the USA, like Equifax, have requirements of membership that include inspection of a physical address in the USA. For a company to report missed payments, that company has to be a member. The other cra report that could ding credit would include court actions like judgments.

It depends on where you bought your product. If a person purchases a resale contract for a timeshare, meaning contract paid for in the USA, they could be reported to the consumer reporting agencies, by any member of a consumer reporting agency, that contracts with a foreign time share company.

Ha! Posting links and ignoring parts of them is a skill!

I get what you posted and would agree that anyone who misses payments could get dinged. The Federal Reserve pdf I linked actually reads that foreign debt is not typically reported. That actually means occasionally it does get reported.

Bill

 

[easyrider]

I can tell you my experience with defaulting on timeshares. I purchased 13 timeshares out of Bankruptcy Court for 10 cents on the dollar, thinking I could sell them for 15 cents on the dollar. When I discovered my mistake ( they are worth about a minus $500) I just deeded them back to the Timeshare company and sent the deed to their county to have recorded. I did this about 4-5 times and I have never heard from anyone or had my credit dinged. I think they have so many defaults that just getting my unit back through no effort on their part convinced them to go after someone else, not me. The units are now out of my name and into theirs. I did this about 8 years ago and still no problem, my credit is still almost perfect.

Thanks for posting !! I think many people did the same with the same results.

Bill

 

[davidvel]

Indeed, I have quoted links that suggest that the consumer reporting agencies in the USA, like Equifax, have requirements of membership that include inspection of a physical address in the USA. For a company to report missed payments, that company has to be a member. The other cra report that could ding credit would include court actions like judgments.

It depends on where you bought your product. If a person purchases a resale contract for a timeshare, meaning contract paid for in the USA, they could be reported to the consumer reporting agencies, by any member of a consumer reporting agency, that contracts with a foreign time share company.



I get what you posted and would agree that anyone who misses payments could get dinged. The Federal Reserve pdf I linked actually reads that foreign debt is not typically reported. That actually means occasionally it does get reported.

Bill

You keep reporting this but keep ignoring that major debt collection agencies ARE members of the CRAs, and can report delinquent debt. I'm not saying they do or don't , just that they can.

 

[easyrider]

You keep reporting this but keep ignoring that major debt collection agencies ARE members of the CRAs, and can report delinquent debt. I'm not saying they do or don't , just that they can.

No, I haven't. A debt collection agency in the USA that is a member of the consumer reporting agencies can report delinquent debt. I think I was clear in this entire thread that only members can report. Membership does include debt collectors that meet the requirements for membership.

Bill