Defaulting on Maintenace Fees - Another Approach

[bogey21]

Whenever this subject comes up there are numerous responses as to why it shouldn't happen and what can happen if one does default.

What I think would be more useful than conjecture are some true confessions by those who have defaulted and what actually happened to them.

George

 

[DeniseM]

Respectfully, it's not conjecture, we know from reports from our BOD's that they are turning people over to collections and foreclosing.

I wouldn't expect any confessions - Tuggers don't roll that way, and if they did, why would they post it on TUG?

However, we have had lots of guests tell us they got turned over to collections and foreclosed on.

 

[jlr10]

We were at a meeting and the resort manager advised they are foreclosing on the units with long outstanding maintenance fees. For those who are just behind they first move their room assignment fromt the one of their choice to a less desirable view, and when they show up they are told bring the fees up to date to get their room. If they don't they are turned away. They stated they turned away an entire bridal party and guests.

 

[bogey21]

I wouldn't expect any confessions - Tuggers don't roll that way, and if they did, why would they post it on TUG?

If I had experienced the ramafications of defaulting, I would post what happened to me to help those in difficult circumstances make a more informed and rational decision when deciding what to do.

George

 

[ausman]

Perhaps we should start "softly" with this topic.

There seems to be a viewpoint that not all share.

I'll start with an experience or story, I owned a week 25 at a Cape Cod resort. A somewhat desirable week, but at a seasonal place.

After a few years ownership I found out there was almost a 30% delinquency rate. Original owners had aged and there was a large number of them who no longer could use, slower weeks owners also wanted to turn them back in and the resort principals complied.

Obviously they all first defaulted with seemingly no consequence. Us, the owners of the more desirable weeks then were subject to special assessments and ultimately the failure of the resort.

The story can prove either side of the argument you are on.

I'm glad you raised the topic and will follow further posts with interest.

 

[Ridewithme38]

 

[ronparise]

the reason that the other threads on default go to the legal discussion and the moral discussion and the root cause and the question; what can a resort do about it?; rather than sticking to the topic you outlined is that the question you are asking is a simple one and has been answered over and over most recently right here with Denise's one sentence answer:

"Respectfully, it's not conjecture, we know from reports from our BOD's that they are turning people over to collections and foreclosing."

I might add that these folks will almost certainly take a hit to their credit. But speaking from some experience working with people that have lost or are about to lose their homes to foreclosure its not the end of the world. Often times its a relief to go from a $3000 mortgage payment to a $1500 rental payment for a similar house

So George, you have your answer


I am not interested in the the legal discussion and the moral discussion either
The discussion I want to have is around basham's post. What can a resort do when they are collecting only 30% of their fees to turn that situation around? or is 30% the tipping point?...next stop failure


I have a personal interest here. I own at a resort where over 30% of the intervals are not paying and my fees are therefore about 30% too high. What do we do??

 

[timeos2]

At our resort we have what is a low delinquency rate & strict enforcement. Nevertheless since 2001 - when we had a far less diligent Management that didn't worry about collections as much as sales - we have had to foreclose on over 700 owners to clean up those old delinquents! So yes - people do lose their ownership as well as use rights & take a credit hit when they default on fees.

 

[bjones9942]

I have a personal interest here. I own at a resort where over 30% of the intervals are not paying and my fees are therefore about 30% too high. What do we do??

I see several options that might help ...

1. Offer to move annual usage owners to eoy.
2. Restructure MF's from an annual to a monthly payment.
3. Institute a buyback program for a one time fee.
4. Reduce transfer fees.
5. Allow owners to 'skip a year' (no usage/no mf's), say, every 10 years.
6. Offer to change deeded ownership to rtu with termination dates.
7. Help owners when needed, but be firm and use a bad ass collection agency for those that won't take advantage of your help.
8. Develop the rental of unused weeks to the general public further by offering 'deals' and 'packages'. Advertise these both via print/radio/web and via press releases to local travel agents.
9. Get a local television station involved in a 'Luxury Getaway' giveaway contest.
10. Trade unused inventory (units) with local businesses in exchange for meals (for owner giveaways), supplies, etc.
11. Don't sell to people that can't afford to pay.
12. Run a credit check on potential resale purchasers and exercise ROFR if they can't afford to pay.
13. Treat current owners with respect. Don't mislead potential owners.
14. Buy dinner and drinks for owners that use their week for x consecutive years (as opposed to trading/banking them).
15. Give bonus weeks every x years to owners that pay on time (or early).
16. Go the extra mile for owners (flowers in the room, mints on pillows - the little touches that aren't done anymore. Royal Caribbean makes little animals out of towels and leaves them on the bed or couch - very cute and memorable). Make owners want to do anything to stay owners.

It might seem counter productive to have a strict collections policy AND try to make owners feel that they're special - it's a 'carrot and stick' kind of thing. You want owners that value the ownership enough that it would take a real and pressing hardship to give it up. You also want them to understand that if they give it up by walking away, there will be consequences.

 

[laura1957]

I had to laugh at this one - this is just a few miles from my house I also was born & raised on LI.

 

[bogey21]

So George, you have your answer.

Actually I don't. The answer I am looking for is "I defaulted and this is what happened to me".

The answers I see here are more like "this is what can happen" or "this is what I am told happens". I'm looking for first hand knowledge.

George

 

[ronparise]

Im not sure what you are looking for denice's hypothetical and my actual are the same

Heres a personal story

Not a time share but the mortgage on my home...I was hounded by collections people, went through the foreclosure process, tried to negotiate a modification, or deed in lieu, ultimately there was an auction sale at the courthouse, the bank took it back and sold it to someone else for roughly half of what I owed.and two thirds of what I offered....I blue through my savings trying to save the place, My credit is shot, I am a cash only guy now, cant borrow a dime, have to rent after being a home owner for nearly 40 years. But I got to tell you now that is over and I have adjusted my lifestyle to what I can pay cash for...What a relief...

The only thing I can buy now are timeshares...the dummies dont even check credit

This is exactly the same process a condo association or HOA would go through. exactly as Denise has outlined


different associations may make it easier by accepting the deed back, or by just not doing anything, or by going the foreclosure route without even trying to collect or negotiate first.

 

[bogey21]

......"we know from reports from our BOD's that they are turning people over to collections and foreclosing."

...... these folks will almost certainly take a hit to their credit.

So George, you have your answer

"we know" and "these folks will almost certainly" don't answer my question.

What will answer my question is when someone steps up and says "I defaulted on my Timeshare Week and this is what happened to me.

Maybe no Tuggers have ever defaulted. If so, great. But I have to believe that some few out of our thousands have defaulted and sharing what happened to them would be most enlightening.

George

 

[DeniseM]

Suggestion: To illicit the info. you are looking for, change the title of the post to reflect the question you are asking: "Have you defaulted on a timeshare?"

However, I will be surprised if you get much response:

1. Financial problems are personal, and many people wouldn't want to share that info. - I wouldn't.

2. On the other hand, if you defaulted on your timeshare as a matter of choice (without financial hardship) and you post that on TUG, it may result in quite a bit of criticism.

3. If you default on your timeshare, you no longer own a timeshare, so you may be less likely to continue to actively participate in TUG.

*I don't have any problem at all with you asking, but those are some of the reasons you may not get much response.

 

[ronparise]

"we know" and "these folks will almost certainly" don't answer my question.

What will answer my question is when someone steps up and says "I defaulted on my Timeshare Week and this is what happened to me.

George

If 10 folks step up and answer your question; what good does that do you? the 11th, will surly have a different story. Each resort is different each owner is different, and what happened in one place to one person has no effect on what happens to the next

 

[heathpack]

You have been buying up all these timeshares on credit?

Im not sure what you are looking for denice's hypothetical and my actual are the same

Heres a personal story

Not a time share but the mortgage on my home...I was hounded by collections people, went through the foreclosure process, tried to negotiate a modification, or deed in lieu, ultimately there was an auction sale at the courthouse, the bank took it back and sold it to someone else for roughly half of what I owed.and two thirds of what I offered....I blue through my savings trying to save the place, My credit is shot, I am a cash only guy now, cant borrow a dime, have to rent after being a home owner for nearly 40 years. But I got to tell you now that is over and I have adjusted my lifestyle to what I can pay cash for...What a relief...

The only thing I can buy now are timeshares...the dummies dont even check credit

This is exactly the same process a condo association or HOA would go through. exactly as Denise has outlined


different associations may make it easier by accepting the deed back, or by just not doing anything, or by going the foreclosure route without even trying to collect or negotiate first.

 

[ace2000]

Heres a personal story..

Ron, I appreciate your honesty in this thread. As Denise mentioned, I didn't expect to see too many come forward. For all the people that would like to condemn Ron, please remember that according to his location on TUG, he lives in South Florida... which has been hit very hard by the real estate crisis. I'd like to ask any of the critics out there what they'd do when their house becomes worth 50% of it's original value? Or to make it even more real, as an example.. what would happen if your house flooded and wasn't covered by insurance? Be careful how you answer, because with a little bad luck (health, career, or otherwise), anyone else can be in the same boat.

Next, I'm not sure what the OP is after exactly. But, it's already been said. If you don't pay your maintenance fees, you will be contacted by the collection agencies and face potential foreclosure.

If behind on your payments, the resort may be more likely to make a deal at this point on a deedback, so check into it. If left unpaid, it will most likely get reported on your credit report. However, these collection agencies are required to report both the good and the bad history. Generally, resorts will never report the good and the bad payment history on a timeshare. However, some may go that extra mile. If they do report you, you have the right to challenge. It is doubtful that any collection agency will be able to produce a contract where you agreed to pay annual maintenance fees. Just ask any attorney familiar with consumer protection statutes about why that's the case.

I've seen some TUG 'experts' mention potential wage garnishments and all I can say is that they really don't know what they're talking about. It's too complicated to explain, but let me keep it simple by saying that the costs for the resorts to go down that path are far greater than the return.

Please don't rely on the TUG 'experts'... this is a legal matter and seek an attorney. It will be money well-spent. And remember the TUG 'experts' all have a selfish interest in the matter, because the more people that don't pay at the resorts where they own, the more they will have to pay.

Last of all, this in the interest of those that are really facing a hardship. If you can pay, then yes, morally you should pay what you committed to.

 

[bjones9942]

I've seen some TUG 'experts' mention potential wage garnishments and all I can say is that they really don't know what they're talking about. It's too complicated to explain, but let me keep it simple by saying that the costs for the resorts to go down that path are far greater than the return.

It *may* be correct that a resort wouldn't go so far as the garnishment process, but I can guarantee you, in a great many cases, the collection agency they sell the debt to WILL. Nothing complicated about it at all. Collection agency buys debt. Collection agency gets judgment against debtor from court. Debtor still doesn't pay so collection agency gets a writ of garnishment. Money is taken from debtor's paycheck until judgment is satisfied. In fact, some courts will issue the writ of garnishment at the time of judgment.

'It is doubtful that any collection agency will be able to produce a contract where you agreed to pay annual maintenance fees.'

What? I can only speak to my experiences showing that: a collection agency buys debt from a creditor (resort in this case). In buying the debt, the collection agency requires documentation proving the existence of the debt - otherwise it would be extremely difficult for them to prove their case in court [where many collection actions wind up]. This would be the original contract between the creditor and debtor stating that a maintenance fee is due the creditor from the debtor. There would also be a payment history attached showing payment was not received.

I will agree with your sentiment 'this is a legal matter [and] seek an attorney'.

And as a little aside, I would never condemn Ron, nor anyone else who attempts to satisfy their obligations, even when those attempts are unsuccessful. The people (whom I don't 'condemn', I just don't want to become friends with) who think it's perfectly fine to walk away from obligations because they've changed their mind are the ones I think have moral compasses that point the wrong way.

And I'm by no means an 'expert' as you like to put it - but I'm not an idiot either. Nor do I have a 'selfish interest' in voicing my opinion or attempting to answer a question here or there, other than that which applies to everyone else who makes a post - that we enjoy seeing our words in print.

 

[ace2000]

.. but I can guarantee you, in a great many cases, the collection agency they sell the debt to WILL. Nothing complicated about it at all. Collection agency buys debt. Collection agency gets judgment against debtor from court. Debtor still doesn't pay so collection agency gets a writ of garnishment. Money is taken from debtor's paycheck until judgment is satisfied. In fact, some courts will issue the writ of garnishment at the time of judgment.

Do you have any idea of what a garnishment judgment would cost a collection agency? Obviously not. For one thing, the matter would have to be settled in both the resort's location and the where the owner resides.

It would take several years of maintenance fee collections just for a agency to break even on that pursuit. It's not worth the effort, trust me. I did not say it was impossible, just very unlikely.

As far as your comment about the collection agency producing a contract for maintenance fees... again, I would advise everyone to talk to an attorney about this, but it is extremely unlikely in their position.

 

[bjones9942]

Having worked in finance (in one way or another) for 35+ years, I can say yes - I'm well aware of what the procedures/costs are. Companies I've worked for have both done their own collections and sold bad debts to collection agencies.

I believe I was clear when I said that perhaps the resort wouldn't pursue garnishment, but a collection agency would be likely to.

The cost of small claims court is MINIMAL. I'm not certain why you keep insinuating there are heavy costs involved. Here in Washington, filing fees are less than $40. Then you have the wages of the person who is sitting in court pleading your case. Yes, I'm leaving out a few nominal costs. When your recovery is a few thousand dollars, and you purchased the debt for a couple of hundred - yes, this is more than cost effective. And as I said, it is NOT unheard of for our courts to issue a writ of garnishment at the time of judgment.

This is what collection agencies do for a living - what makes you think they'd buy your debt and then do nothing at all? There is no logic to your postulations.

 

[ace2000]

It *may* be correct that a resort wouldn't go so far as the garnishment process, but I can guarantee you, in a great many cases, the collection agency they sell the debt to WILL.

I'll add one more comment... you obviously left out the part that several states have laws that would prohibit wage garnishment for this type of debt. Enough of this nonsense.

 

[ace2000]

I believe I was clear when I said that perhaps the resort wouldn't pursue garnishment, but a collection agency would be likely to.

And I was clear also in stating the exact opposite. A collection agency is NOT likely to go down this path.

This is what collection agencies do for a living - what makes you think they'd buy your debt and then do nothing at all? There is no logic to your postulations.

A collection agency has a lot more options in collecting a debt, to make it worth their while. Sometimes all it takes is tracking someone down. Wage garnishment can happen, but it's more likely to be used as a scare tactic, which you seem to be doing here.

Again, get an attorney folks... every state and every contract presents it's own different scenarios.

 

[bjones9942]

What I'm doing here is trying to keep people from your false sense of security.

And I agree - enough.

 

[e.bram]

I had a dispute about a bill from our utility(electric bill). The company turned it over to a collection agency. I requested copies of the meter readings and the reader's name. They could not produce them and eventually gave up.
Bear in mind that the small claims filing fees might be small having an attorney(for the collection agency) for a whole day and producing subpoenaed witnesses is not. In New Jersey the courts bend over backwards to help pro se consumers. You don't need a lawyer because your worst case scenario is losing which is essentially what happens if you pay without a fight.

ps. I kicked many company's lawyers asses, because they don't use the best lawyers for these cases.(not much money involved)

 

[bjones9942]

Attorneys are not required (nor usually used) for small claims actions. A representative of the company can file and present the case.