What if you just don't pay the developer: legal implications

[Iggyearl]

Has anyone just stopped paying? What were the implications?

The critical question of this thread.... And people DO stop paying. The only problem is that those people are not on Tug. This is a users forum. Not a "I defaulted on my timeshare forum." The back-end ugliness of defaults is that developers do not talk about them very much. They talk about VPG, tour volumes, and average credit scores. However, Wyndham Destinations does report "loan loss provisions" when they do their quarterly conference call. And analysts do ask questions about defaults. And Wyndham reports that they average 20% loan losses. That is - 1 out of 5 dollars that customers owe Wyndham on mortgages will not be paid. That doesn't include any discussion on maintenance fees - only mortgage debt.

Does Wyndham pursue these folks? Don't know. But CalGals post #4 does summarize how well developers do on defaults. They just reset the sales machine and keep on chugging. If the developers sued everybody who defaulted, there would be bad press all over, and the underside of the timeshare sales process would be exposed. The developers surely don't want that.

And in my humble opinion, if there were no credit scores, the timeshare default rate would skyrocket. We all value ourselves by our credit score. And some people pay bills that they don't want to - just to keep up their credit score. Others say, "Screw it," and take the consequences.

 

[andre10056]

What I like about what @Grammarhero and @Fredflintstone have done is given foundational legal information that a person can bring into a legal consultation so the lawyer understands the context and can readily advise on the best approach without spending time (aka your money) trying to find this information.

I agree. But I never even understood what all that was until today. So thanks all for sharing. Now, indeed, everyone has the ammunition they need to approach this intelligently.

Getting "empowered" is a wonderful thing.

 

[andre10056]

The critical question of this thread.... And people DO stop paying. The only problem is that those people are not on Tug. This is a users forum. Not a "I defaulted on my timeshare forum." The back-end ugliness of defaults is that developers do not talk about them very much. They talk about VPG, tour volumes, and average credit scores. However, Wyndham Destinations does report "loan loss provisions" when they do their quarterly conference call. And analysts do ask questions about defaults. And Wyndham reports that they average 20% loan losses. That is - 1 out of 5 dollars that customers owe Wyndham on mortgages will not be paid. That doesn't include any discussion on maintenance fees - only mortgage debt.

Does Wyndham pursue these folks? Don't know. But CalGals post #4 does summarize how well developers do on defaults. They just reset the sales machine and keep on chugging. If the developers sued everybody who defaulted, there would be bad press all over, and the underside of the timeshare sales process would be exposed. The developers surely don't want that.

And in my humble opinion, if there were no credit scores, the timeshare default rate would skyrocket. We all value ourselves by our credit score. And some people pay bills that they don't want to - just to keep up their credit score. Others say, "Screw it," and take the consequences.

I suppose the credit hit needs to be evaluated against what you may save by not paying...and also where you may be in your credit life. 28,000 reasons not to pay are a lot of reasons.

If you're already in your home and will be staying a while (for more years than the negative credit implications of the timeshare foreclosure), already bought a car, will likely buy used cars for cash in the future, already have credit accounts that obviously won't be closed if your credit rating declines somewhat (and it would be interesting to know how much that "somewhat might be), it's no problem whatsoever.

If you're nearing age 62, you can even get a reverse mortgage for which a credit score is irrelevant because you'll never have to make a payment on it.

But, yes, if you're young and about to buy a home, get credit to build a business, etc., it MAY be a problem (depending on what the credit score hit might be).

But you can always tell prospective creditors that the only bill you didn't pay was a timeshare purchase...and explain how you were defrauded, etc.. I think you can even add that info into your credit report at each national credit agency.

Then, after losing the $28,000 debt, the person can buy resale and be a happy timeshare user...and a happy contributor to TUG.

 

[pedro47]

Excellent CalGal. So by "anti-deficiency" you mean that a foreclosure can only take back the timeshare. That's it. No payment of what might allegedly be owed on the contract?

Anti - Deficiency .... are the Two Key Words To Remember in a Timeshare Transaction.

 

[andre10056]

Anti - Deficiency .... are the Two Key Words To Remember in a Timeshare Transaction.

Pedro, I had to smile after reading your post. I agree completely. Great way to put it.

I had seen a reference or two to "anti-deficiency" before yesterday. But I really didn't understand what it was and it wasn't really of great interest to me since the timeshares I own right now are OK. In each case, I can and have several times rented them for more than I pay in MFs. They're time consuming to rent but at least I don't lose money.

That wasn't always the case in the past, however. But I've thankfully managed to sell those timeshares, less than for what I paid on ebay (which wasn't much in the first place) but at least they're gone.

But, after reading the above-linked post, out of concern for him (or her), I asked the question that started this thread. And was completely blown away by learning details about anti-deficiency.

In fact, I just checked back to see if that other person, the one who bought a "cold season" floating week at Ocean 22 in Myrtle Beach, was also thinking about anti-deficiency. Apparently not, because his latest post basically said, "I'm going to make the best of it and make use of it".

However, I don't know if he made an informed decision or whether he listened to most of the posters, who write things like:

"It's a great resort. Use it and enjoy it."

"We've all made the mistake you made and have learned to live with it. Try to make the best of it."

"Don't think about it too much."

"Oh no! DO think about it. Let all those negative emotions out as that's the best way to start healing."

I read through all that and I was thinking, "Are they talking to someone who just bought an offseason timeshare week in Myrtle Beach for megabucks...and who still owes megabucks...or are they abused women talking to another abused woman?"

So let me get back into that other thread and gently try to steer the conversation in another direction.

 

[CalGalTraveler]

Pedro, I had to smile after reading your post. I agree completely. Great way to put it.

I had seen a reference or two to "anti-deficiency" before yesterday. But I really didn't understand what it was and it wasn't really of great interest to me since the timeshares I own right now are OK. In each case, I can and have several times rented them for more than I pay in MFs. They're time consuming to rent but at least I don't lose money.

That wasn't always the case in the past, however. But I've thankfully managed to sell those timeshares, less than for what I paid on ebay (which wasn't much in the first place) but at least they're gone.

But, after reading the above-linked post, out of concern for him (or her), I asked the question that started this thread. And was completely blown away by learning details about anti-deficiency.

In fact, I just checked back to see if that other person, the one who bought a "cold season" floating week at Ocean 22 in Myrtle Beach, was also thinking about anti-deficiency. Apparently not, because his latest post basically said, "I'm going to make the best of it and make use of it".

However, I don't know if he made an informed decision or whether he listened to most of the posters, who write things like:

"It's a great resort. Use it and enjoy it."

"We've all made the mistake you made and have learned to live with it. Try to make the best of it."

"Don't think about it too much."

"Oh no! DO think about it. Let all those negative emotions out as that's the best way to start healing."

I read through all that and I was thinking, "Are they talking to someone who just bought an offseason timeshare week in Myrtle Beach for megabucks...and who still owes megabucks...or are they abused women talking to another abused woman?"

So let me get back into that other thread and gently try to steer the conversation in another direction.

Re: Abused women talking to another abused woman. Not the case at all. He is out the $28k. Nothing will bring that $$ back. So you can decide to try to maximize what you own to tweek out ROI over the future, or cut bait and lose the $28k. Many believe it is better to at least get some enjoyment out of the money you spent, instead of just losing the $28k, the headache of disposing and potential credit hit.

He said it very eloquently when he said, If the unit retained its value, then we would not be having this conversation. Many TUG discussions would not exist if the industry did more to retain value.

BTW...Not sure if you know the HGV system but just because he purchased a cold season doesn't mean he must use it in cold season because he can use points in warm season. You don't buy a timeshare to rent it out all the time.

 

[bogey21]

What I gather from all this is that the best thing one can do is do absolutely nothing. Don't hire a lawyer. Don't respond in any way (voice, email or regular mail) to anything from a Developer and everything will eventually go away. The worst thing that can happen to you is that you forfeit what you paid and that your Credit may be dinged. Do I have this right?

George

 

[andre10056]

Re: Abused women talking to another abused woman. Not the case at all. He is out the $28k. Nothing will bring that $$ back. So you can decide to try to maximize what you own to tweek out ROI over the future, or cut bait and lose the $28k. Many believe it is better to at least get some enjoyment out of the money you spent, instead of just losing the $28k, the headache of disposing and potential credit hit.

He said it very eloquently when he said, If the unit retained its value, then we would not be having this conversation. Many TUG discussions would not exist if the industry did more to retain value.

BTW...Not sure if you know the HGV system but just because he purchased a cold season doesn't mean he must use it in cold season because he can use points in warm season. You don't buy a timeshare to rent it out all the time.

I may be wrong, but I think in one of his earliest posts he said, "I can't believe I owe $28,000". So, yes, if he already paid the entire purchase price in full, that's a sunk cost. Nothing he can do to recover that. But, if he didn't pay 100% of the purchase price, that's something else.

 

[CalGalTraveler]

I may be wrong, but I think in one of his earliest posts he said, "I can't believe I owe $28,000". So, yes, if he already paid the entire purchase price in full, that's a sunk cost. Nothing he can do to recover that. But, if he didn't pay 100% of the purchase price, that's something else.

If he owes a mortgage, then he has a few more alternatives. I put those alternatives into that thread.

 

[andre10056]

Thank you, CalGal. Not only did he say, "I owe $28,000" but it would make sense that he still has a mortgage (i.e., that he still owes for the financing on his purchase). He lamented the fact that he was out of the rescission period since he bought such a long time ago..April 2019.

 

[CalGalTraveler]

Thank you, CalGal. Not only did he say, "I owe $28,000" but it would make sense that he still has a mortgage (i.e., that he still owes for the financing on his purchase). He lamented the fact that he was out of the rescission period since he bought such a long time ago..April 2019.

Most of the TUG responses were based on the belief that the money was sunk (mine was). In this case he does have another choice to avoid the cost but it will not be without headache.

 

[andre10056]

What I gather from all this is that the best thing one can do is do absolutely nothing. Don't hire a lawyer. Don't respond in any way (voice, email or regular mail) to anything from a Developer and everything will eventually go away. The worst thing that can happen to you is that you forfeit what you paid and that your Credit may be dinged. Do I have this right?

George

I'm no expert, George, but most of what you said above is correct according to the information provided by others. However, I might disagree with your statement, "Don't hire a lawyer" if you think that the mere hiring of a lawyer would trigger the dreaded, "Neener neener...you objected to the foreclosure" argument (allowing them to sue not just to recover the unit but also all else that they claim you owe).

A lawyer who knows what they're doing might only tell you, "Don't respond in any way. Any response could result in their arguing that you objected". And if that's the case, it's money well spent to confirm what us "amateurs" are claiming ("us" referring to TUGers collectively).

My only question, then, is what if someone (perhaps our attorney) did communicate with something along these lines:

"I received your correspondence about your commencing foreclosure action. I just want to tell you that I fully, 100%, entirely support your doing so. I DO NOT object in any way. But, if you'd prefer, and it's entirely up to you, I'd ALSO be willing to just sign the timeshare over to you".

 

[andre10056]

Most of the TUG responses were based on the belief that the money was sunk. In this case he does have another choice to avoid the cost but it will not be without headache.

Thanks again, CalGal, for editing one of your prior posts. Your posts clearly were made with that assumption. But I'm not sure "most" were. "Misery loves company" I remember hearing from the "older generation" when I was a kid.

Paying $28,000 on one hand. Headache on the other hand. His individual circumstances will determine which will be the better option. But at least now he can make an informed decision.

 

[bogey21]

I try not to hire lawyers because I don't want to incur the expense...

George

 

[andre10056]

I try not to hire lawyers because I don't want to incur the expense...

George

Yes George. I and all other human beings on earth agree. We would all prefer to avoid ever hiring lawyers.

However, in this case, our objective is indeed to avoid "the expense". And it might be good to pay a couple hundred bucks to make sure you're avoiding the much, much higher expense the right way.

 

[LynnHilton]

"[Other posters said] We've all made the mistake you made and have learned to live with it. Try to make the best of it. Let all those negative emotions out as that's the best way to start healing. Are they talking to someone who just bought an off-season timeshare week in Myrtle Beach for megabucks...and who still owes megabucks...or are they abused women talking to another abused woman?"

IMO, the original post from @captain74 strongly expressed TWO topics, two kinds of pain and victimization: emotional and financial. He clearly asked for responses, opinions and options regarding both of those concepts and situations: recoup of emotional well-being and recoup of money.

Each of us answered via our own experience and area of expertise. I understood and experienced the same emotions as him, and had previously chosen to make the best of it in my situation. So my answers spoke to the emotional questions, the emotional options, and some practical ways to "make the best of it."

Others in that thread, and here in your excellent thread as well, understood more of the financial implications and options that he would have, so they spoke there and here about OP's quest for financial info.

I wish you hadn't used an analogy regarding abused women. There are many ways in the world for both men and women to become victims at the hands of others: domestic violence, drunk driving, violent crime, embezzlement, investment Ponzi schemes, burglary, etc. etc. etc. Someone who has felt like a victim of "method A" can often relate to and understand someone who feels like a victim of "method B". Responding to the emotional aspects of feeling like a victim is just as valid as responding to the financial aspects of feeling like a victim.

I think your thread here, and @captain74 thread, and all the answers from everyone on both threads, were informative, educational, useful and compassionate.

 

[andre10056]

IMO, the original post from @captain74 strongly expressed TWO topics, two kinds of pain and victimization: emotional and financial. He clearly asked for responses, opinions and options regarding both of those concepts and situations: recoup of emotional well-being and recoup of money.

Each of us answered via our own experience and area of expertise. I understood and experienced the same emotions as him, and had previously chosen to make the best of it in my situation. So my answers spoke to the emotional questions, the emotional options, and some practical ways to "make the best of it."

Others in that thread, and here in your excellent thread as well, understood more of the financial implications and options that he would have, so they spoke there and here about OP's quest for financial info.

I wish you hadn't used an analogy regarding abused women. There are many ways in the world for both men and women to become victims at the hands of others: domestic violence, drunk driving, violent crime, embezzlement, investment Ponzi schemes, burglary, etc. etc. etc. Someone who has felt like a victim of "method A" can often relate to and understand someone who feels like a victim of "method B". Responding to the emotional aspects of feeling like a victim is just as valid as responding to the financial aspects of feeling like a victim.

I think your thread here, and @captain74 thread, and all the answers from everyone on both threads, were informative, educational, useful and compassionate.

 

[andre10056]

IMO, the original post from @captain74 strongly expressed TWO topics, two kinds of pain and victimization: emotional and financial. He clearly asked for responses, opinions and options regarding both of those concepts and situations: recoup of emotional well-being and recoup of money.

Each of us answered via our own experience and area of expertise. I understood and experienced the same emotions as him, and had previously chosen to make the best of it in my situation. So my answers spoke to the emotional questions, the emotional options, and some practical ways to "make the best of it."

Others in that thread, and here in your excellent thread as well, understood more of the financial implications and options that he would have, so they spoke there and here about OP's quest for financial info.

I wish you hadn't used an analogy regarding abused women. There are many ways in the world for both men and women to become victims at the hands of others: domestic violence, drunk driving, violent crime, embezzlement, investment Ponzi schemes, burglary, etc. etc. etc. Someone who has felt like a victim of "method A" can often relate to and understand someone who feels like a victim of "method B". Responding to the emotional aspects of feeling like a victim is just as valid as responding to the financial aspects of feeling like a victim.

I think your thread here, and @captain74 thread, and all the answers from everyone on both threads, were informative, educational, useful and compassionate.

My apologies, Lynn Hilton. I was not "calling anyone out" (quote unquote). I was completely bewildered and at a loss since the only things being told Captain74 were how he should make the best of things.

To give my post (the one you're here referring to) some context, please note that I do indeed feel that the "developer" (as broadly defined) is an abuser. A truly horrible abuser. So non-stop posts about "making the best of things" were, to me, inexplicable and frightening.

If someone's being abused, certainly one option that should be recommended might be, "Escape the abuse". In fact, that might be the overwhelmingly best solution. By far. Only if the victim could NOT escape, might you suggest anything else.

So without anyone ever making mention of that "escape the abuse if you can" option, and well after I started this thread (linked to the other thread), I could not understand, and again was bewildered by, everybody recommending only the "make the best of it" option.

But I later learned that CalGal didn't know that Captain74 might not have already paid everything off, and I now know that you hadn't yet visited this thread. So, indeed, I now DO understand what I didn't understand before. If there were no option to escape the timeshare obligations, as "everyone" thought, I too might have posted along the lines you did. Your very helpful posts about trading opportunities and sharing your emotional evolution may indeed have been optimal information for him.

But now I hope that he (or she) is on the same page with us all. And knows that he may have another option which MAY allow him to escape altogether. That's not a certainty. But at least he may be able to make an informed decision.

And, by the way, if he had bought in another state, a state that doesn't have any "anti-deficiency" law (which is a horrible, "not very intuitive" phrase...I prefer "no deficiency judgment"), then all of the posts responding to his emotional pain would have been the optimally kind and compassionate thing to convey, which I now fully understand was precisely the reason for your posts.