Timeshares allow you to share the expense of a property with different owners. With a deeded timeshare, you actually have a part of the property and preserve property rights to the timeshare. Failure to cover your deed of trust on the timeshare effects in a default option. Your lender may opt to pursue foreclosure proceedings on the property to take charge of the property and sell your share in auction. Very similar to foreclosure for an actual home, timeshare foreclosure affect your financial health in a variety of ways.

Credit Report

Poor credit influences the total amount of money you pay in your insurance premiums and interest rates. A foreclosure falls your credit score by up to 160 points. The past since entries for missing your payments also drop your score by up to 135 points. You may experience credit denials after the foreclosure. Your current credit cards may close reports or slash credit lines together with the decrease in your credit score.

Tax Implications

When the lender auctions from the property, you may be stuck with a deficiency balance. The lending company writes off the deficiency and sends a 1099-C Cancellation of Debt form to the IRS. You must include this amount into your taxable income for the following year. The increase in taxable income results in an increased tax burden. The Mortgage Forgiveness Act of 2007 applies to principal residences only so that you don’t get this debt relief for a timeshare.

Mortgage loans

A foreclosure on your record hinders your ability to get future credit including a different mortgage. FHA and Fannie Mae loans require three to five years after a foreclosure before you will receive an acceptance. You also have to maintain excellent credit during this time frame to be eligible for a mortgageloan. Conventional lenders can snub your program for up to seven years prior to the foreclosure falls from the credit report. You face higher interest rates and less-than-favorable conditions if you are approved.


Businesses often run credit reports on employees and possible employees. A foreclosure could hinder your ability to get a promotion or land your dream job. If you are looking for work in the financial industry, you may have a hard time getting work with lousy credit.

See related