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

[Karen G]

The standard response to people who inquire about defaulting on a Mexican timeshare purchase is that it will affect one's credit rating. Does anyone have any real actual experience of that happening? Has anyone simply stopped paying either their maintenance fees (if their timeshare is already paid for) or stopped making payments on a loan for the purchase of the timeshare? What happened?

 

[Passepartout]

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

 

[oldbuyer]

Karen, I have not had personal experience with a credit default but have talked to the VLO at Cabo Villas several times and asked what do they do. He said it's not worth chasing someone for one maintenance fee on a fully paid contract and CV offers a turn back option on fully paid contracts equal to a transfer fee (reasonable). They then take back all rights to the contract and can either resell the inventory or keep it as hotel inventory.

IF the contract is not paid in full, CV turns it over to a collection company and they can do whatever they want to do to try and collect the remaining unpaid balance. He contends the contract obligation is enforceable even though it is a RTU and has no equity. He said that they get 50 cents on the dollar but I have no knowledge if that is true.

I turned in two CV contracts for the cost of $100ea this winter instead of giving them away as it was better for me to know it was properly disposed of (toxic waste) that to risk the new owner did not execute the transfer.

Some of the other Cabo resorts also have "surrender options".

 

[easyrider]

There is no way for the Mexican timeshare rtu contract to be enforced in the USA. A person could just stop making payments and I doubt the resort would spend any time on the mater whether the contract obligations are paid or not. If a buyer gave a down payment, which is often the case, to get the down payment back after the rescission period has ended, could require a Mexican Court decision.

So the buyer from the USA can sue the Mexican Resort in Mexico but the Mexican Resort can not sue the American buyer in the USA to get a judgement without jumping through many hoops. If the Mexican Resort attempts to collect without a proper judgement they would be in violation of the USA's Federal Laws regarding collections.

https://travel.state.gov/content/tr...ernl-judicial-asst/Enforcement-of-Judges.html

General
There is no bilateral treaty or multilateral convention in force between the United States and any other country on reciprocal recognition and enforcement of judgments

Bill

 

[pittle]

We have one that we quit paying on 2 years ago. We had gone in November 2015 and the resort was going downhill and still was not completed. They raised the MF by $200 for 2016 and we chose not to pay them - they were going to be higher than our Buganvilias Sky Suite that has tons of amenities. In January 2017 we got an email that asked if we were still part of the _______ family and I responded that because they had not kept up their end to have a nice resort, we did not want to go there. He responded - thank you for your answer, sorry you were disappointed we hate to see you go. We did not get a MF notice this year.

We went there 6 times and each year we could see that they were not keeping it up. When new, the units were totally awesome, but wear and tear and deferred maintenance kept us from enjoying our visit. Things like only two chaise loungers at the rooftop pool, and one was broken is really irritating! I understand that they are converting all but 3 units to full ownership condos now and save 2 for the few timeshare owners who are still hanging in there.

 

[oldxr]

If they got a down payment or a payment in full they still got some money .If somebody quits paying the maintenance fee on a fully paid for unit they will just sell it again .But the company that handles the maintenance fees for my timeshare is also a collection agency here in the states .More than likely would show up on a credit report if I quit paying .Last 2 years I have rented it out to friends to cover the maintenance fee.

 

[easyrider]

If they got a down payment or a payment in full they still got some money .If somebody quits paying the maintenance fee on a fully paid for unit they will just sell it again .But the company that handles the maintenance fees for my timeshare is also a collection agency here in the states .More than likely would show up on a credit report if I quit paying .Last 2 years I have rented it out to friends to cover the maintenance fee.

There are no Federal Laws regarding enforcement of judgments from foreign countries. Any attempt to get around this to collect would likely be in violation of the Fair Debt Collection Practices Act because the foreign company would need a judgement from a US Court to attempt collection. Without a court judgement from a court in the USA there is no way the foreign company can report you to the Credit Reporting Companies to tarnish your credit report.

Bill

 

[oldbuyer]

There are no Federal Laws regarding enforcement of judgments from foreign countries. Any attempt to get around this to collect would likely be in violation of the Fair Debt Collection Practices Act because the foreign company would need a judgement from a US Court to attempt collection. Without a court judgement from a court in the USA there is no way the foreign company can report you to the Credit Reporting Companies to tarnish your credit report.

Bill

Many/most Mexican timeshares collect their MF and installment financing debt through US companies in CA and AZ.(PBS, Playa Grande,Hacienda Encantada, Cabo Villas)

 

[easyrider]

Many/most Mexican timeshares collect their MF and installment financing debt through US companies in CA and AZ.(PBS, Playa Grande,Hacienda Encantada, Cabo Villas)

Yes, I know this. I use resortcom.com to pay my MF for my Mexican timeshares. What matters is "where" the product was bought. If you bought a Mexican timeshare while in the USA then that company would be doing regular business in the USA and could easily get a judgement. Even so, that doesn't require the debtor to actually pay.

If you buy a product in Mexico and quit paying the company that owns that product, that company can not force a judgement in the USA. If they can't get a judgement then they can't get a collection company to call you or hit your credit report with a derogatory remark because they need the judgement to get a collection order.

Bill

 

[Jim in Cancun]

The simple answer is "YES."
Of course it depends on the individual resort and its policies but, as mentioned, the U.S. collection companis WILL report you to the credit bureau.

 

[easyrider]

The simple answer is "YES."
Of course it depends on the individual resort and its policies but, as mentioned, the U.S. collection companis WILL report you to the credit bureau.

How exactly can a Mexican company, doing business in Mexico, report you to an organization that they do not belong to ? The only companies in Mexico that can report anything to a US credit agency are those based in the USA.

The process is the company in the USA would need to sue the debtor in the USA to get a judgement to turn you into collection. If this happens then it would be on a persons credit report.

A company from a foreign country can not enforce a contract in the USA with out jumping through many hoops. Creditors that can report your credit have gone through an application process, pay a membership fee and buy software that allows them to obtain and send reports. Part of the application process is to have a representative from the credit bureau to do an onsite inspection. None of the credit bureaus in the USA will send a representative to a foreign country. This actually means that no foreign business can report to the credit bureaus in the USA without having their primary business that actually sells things in the USA.

The simple answer is "no".

Bill

 

[buzglyd]

You do not need a judgement to report to a credit reporting agency.

You just need verification of debt.

 

[davidvel]

How exactly can a Mexican company, doing business in Mexico, report you to an organization that they do not belong to ? The only companies in Mexico that can report anything to a US credit agency are those based in the USA.

The process is the company in the USA would need to sue the debtor in the USA to get a judgement to turn you into collection. If this happens then it would be on a persons credit report.

A company from a foreign country can not enforce a contract in the USA with out jumping through many hoops. Creditors that can report your credit have gone through an application process, pay a membership fee and buy software that allows them to obtain and send reports. Part of the application process is to have a representative from the credit bureau to do an onsite inspection. None of the credit bureaus in the USA will send a representative to a foreign country. This actually means that no foreign business can report to the credit bureaus in the USA without having their primary business that actually sells things in the USA.

The simple answer is "no".

Bill

Why do you keep saying you need a judgment to get a hit on your credit report. So if I pay my mortgage late every month (or stop) paying, this won't show up on my credit report until they sue and get a judgment? Of course it will.

I don't know the answer to the OP's question, or the other jurisdictional issues you raise, but clearly you don't need a judgment to ding a credit report.

 

[easyrider]

Why do you keep saying you need a judgment to get a hit on your credit report. So if I pay my mortgage late every month (or stop) paying, this won't show up on my credit report until they sue and get a judgment? Of course it will.

I don't know the answer to the OP's question, or the other jurisdictional issues you raise, but clearly you don't need a judgment to ding a credit report.

In the USA, a company needs to be approved through an application process by the credit companies to extend credit , see reports and give reports. Your bank and all others companies that offer credit have been approved to do this. That is why they can report your missed payments and ding your credit score. These companies that extended credit in the USA make a debtor fill out a personal credit application which gives them permission to look at your credit.

If a business has not been approved to run credit reports they would need to go to court to get a judgement. The judgement will show up as a derogatory on that persons credit report. With a judgement they can then try to collect. A judgement doesn't mean that the debtor will pay.

When a person purchases, lets say a timeshare in Mexico, they do not fill out a credit application and no one checks their credit score because these international companies are not approved by the credit companies in the USA. Since they are not approved by the credit bureaus in the USA they can not report to the credit agencies in the USA. I doubt that any international company can do anything other than get a judgement in their own country which is unenforceable in the USA.

So yes, there needs to be a judgement to ding a persons credit if they are not affiliated with the credit bureaus.

Bill

 

[easyrider]

You do not need a judgement to report to a credit reporting agency.

You just need verification of debt.

Yes, this applies to many products bought on credit in the USA.

This doesn't apply to international credit or any credit extended by a company or person in the USA that is not affiliated to the credit bureaus.

Every one that isn't affiliated with a credit bureau needs to get a judgement to ding credit scores. An example is I rent a house and the renter doesn't pay. I take them to court and get a judgement. I have no way of calling the credit bureau to ding their credit even with the judgement but the judgement will show up on their credit report as a derogatory. With the judgement I can attempt a collection through a collection agency. This could also show up on their credit report.

Bill

 

[buzglyd]

Well your lengthy explanation is totally wrong but you stick with it.

A Mexican company with contracts written in US dollars could assign its debts to a US collection agency and it could be reported to the bureaus.

You do not need a judgement and 99 percent of what agencies report do not have judgements backing them up.

 

[davidvel]

...
When a person purchases, lets say a timeshare in Mexico, they do not fill out a credit application and no one checks their credit score because these international companies are not approved by the credit companies in the USA. Since they are not approved by the credit bureaus in the USA they can not report to the credit agencies in the USA. I doubt that any international company can do anything other than get a judgement in their own country which is unenforceable in the USA.

So yes, there needs to be a judgement to ding a persons credit if they are not affiliated with the credit bureaus.

Bill

You state the bolded part as fact, with no citation to any source. Then you say "I doubt".

The whole question here is: Who (and how) is someone authorized, aka "approved" to report to the credit bureaus, and what is required by them to do so? What is the distinguishing factor between your bank, or your loan shark or your nail salon, or your landlord? What does "affiliated with the credit bureaus" mean? I'm not sure you or buzglyd have cited to anything that is definitive.

 

[easyrider]

Well your lengthy explanation is totally wrong but you stick with it.

A Mexican company with contracts written in US dollars could assign its debts to a US collection agency and it could be reported to the bureaus.

You do not need a judgement and 99 percent of what agencies report do not have judgements backing them up.

How can a Mexican company enforce a judgement in the USA ? According to the State Department they can't.

https://travel.state.gov/content/tr...ernl-judicial-asst/Enforcement-of-Judges.html

There is no bilateral treaty or multilateral convention in force between the United States and any other country on reciprocal recognition and enforcement of judgments

The only way a business can contact Equifax to report a delinquent payment is to actually be a member. Most small businesses in the USA are not affiliated with any of the credit reporting agencies and rely on judgments for collection. The credit reporting companies do monitor judgments and collections through court actions, not because a business owner who isn't affiliated with them reported the delinquent payment.

Bill

 

[buzglyd]

Debt Collection agencies are affiliated with the credit bureaus.

 

[easyrider]

You state the bolded part as fact, with no citation to any source. Then you say "I doubt".

The whole question here is: Who (and how) is someone authorized, aka "approved" to report to the credit bureaus, and what is required by them to do so? What is the distinguishing factor between your bank, or your loan shark or your nail salon, or your landlord? What does "affiliated with the credit bureaus" mean? I'm not sure you or buzglyd have cited to anything that is definitive.

A company needs to go through an application process to become a member of the credit bureaus. Here is some of what is required.

https://www.tsbsoftware.com/how-to-report-credit.jsp

A physical inspection of the business is a requirement. These credit reporting companies do not leave the USA for inspections. No international companies without a physical business location in the USA are allowed. Many people think that because a Mexican timeshare company has a physical address in the USA to collect mf's or make reservations they could report late payments. If it were reported I think it could be disputed because the original contract is from an international company and the report may violate the FDCPA.

Bill

 

[easyrider]

Debt Collection agencies are affiliated with the credit bureaus.

So ? What is your point ? Do you really think a Mexican company can force an American living in the USA to pay their mf by reporting them to a credit agency ? I would like to know the process so if you know it please let us know. From what I have read I very much doubt they can.

Bill

 

[buzglyd]

So ? What is your point ? Do you really think a Mexican company can force an American living in the USA to pay their mf by reporting them to a credit agency ? I would like to know the process so if you know it please let us know. From what I have read I very much doubt they can.

Bill

If a Mexican timeshare property assigns it's debt to an American collection agency it will be the agency and not the Mexican company reporting it.

All very doable.

 

[VacationForever]

I second the response given by @buzglyd. You do not need a judgment to ding someone's credit history. Collection agencies in the US simply needs to report the unpaid debt to the credit reporting agencies. If the debt is not repaid very soon after it being turned over to a collection agency, the debt will get reported to the collection agencies. Any company, local or overseas can turn the debt over to US collection agencies.

 

[easyrider]

If a Mexican timeshare property assigns it's debt to an American collection agency it will be the agency and not the Mexican company reporting it.

All very doable.

How does that happen ? You must think the resort in Mexico just calls Equafax or a collection company and says Joe Bob didn't pay and I am reporting this. It doesn't work that way.

I think it would be illegal for a foreign company to use an American collection agency to collect on a foreign debt without a judgement in a court in the USA. The foreign company can not report to the credit agencies because they are not members of the credit agencies the same way I am not a member of a credit agency. Only members can call in to report some one for non-payment. The only way a credit agency picks this up for a report is if there is a judgement when no one reports it.

When I bought my timeshare from the developer in Mexico I didn't fill out a credit application and didn't provide anything other than my name and address. They need a social security number to identify the debtors credit report.

Anyway, even if this was doable I doubt that it is easy. From what I'm reading, which I have linked in this thread, it doesn't look like a doable dealio.

Bill

 

[easyrider]

I second the response given by @buzglyd. You do not need a judgment to ding someone's credit history. Collection agencies in the US simply needs to report the unpaid debt to the credit reporting agencies. If the debt is not repaid very soon after it being turned over to a collection agency, the debt will get reported to the collection agencies. Any company, local or overseas can turn the debt over to US collection agencies.

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