Getting Divorced? Cancel Your Timeshare

Equal distribution of property, assets and liabilities. It is the first thing that a divorce lawyer will explain to clients who are moving ahead to legally separate.   Did you know that your timeshare can actually become an obstacle if you are getting divorced?

We share the four problems many clients face, when deciding how to transfer ownership or dispense of their timeshare. We’ll also provide some considerations that you may find helpful to assist your financial planning.

Problem #1: Placing a Value on the Timeshare

A timeshare is like a legally binding mortgage for a property that you will never own outright. Essentially, although you completely own the expense of maintenance and fees for the property, a timeshare is nearly impossible for a legal professional to place a value on.

First, they do not retain their purchase value.   If you invested $15,000 in a timeshare ten years ago, do you think you could sell and recoup that initial ‘investment’?  Probably not.  The truth is that timeshare resale is precarious at best, and it is rare that owners recover even a portion of their “buy in” value, let alone the initial investment.

Problem #2: Is a Timeshare an Asset or Liability?

It is both. Timeshares offer an intrinsic value to the owner, as they can use weeks of leased time each year for vacation.

They can weigh more heavily as a liability because the maintenance and membership fees are tangible.  They are a matter of record, even though they can increase dramatically over the course of ownership of the timeshare.  Fees that are $120 per month this year could easily be over $200.00 in three years, depending on the circumstance.

The liability associated with a timeshare can also appreciate over time. Membership and maintenance fees can increase depending on property damage, normal wear and tear, and even natural disasters like flooding, or hurricanes.

Problem #3: Who Owns It?

If the timeshare was purchased by one spouse, and the payments were made over time by the same spouse, owners can argue based on ownership of the contract.  However, in the case of disagreement, both spouses may want the property after they are divorced.  Or neither spouse may want to assume the financial liability of the timeshare contract.   Either way, it’s a problem during separation and divorce proceedings.   Do you want to share the property?  That requires ongoing communication which may not be ideal for all couples.  And hiring a timeshare resale professional can cost you thousands, and they are rarely successful.

Problem #4: Defaulting on Payment

In some cases, couples may mutually decide to keep both names on the timeshare agreement, but allow the fees to be paid by the spouse who will be using the vacation time.  It may seem like a peaceful arrangement, but the choice to remain on a financial agreement after divorce is a risky one.

Despite the fact that you will not be paying for the timeshare, or using the allotted weeks available, you can still be held liable (and your credit can be negatively impacted) if your former spouse misses a payment, or pays membership and maintenance fees late.   There is no way to predict how a former partner will govern themselves financially after a divorce, and you are essentially gambling with your own personal finances and credit rating.

We know that most people would like to separate on good terms, but the window of opportunity is open for malicious financial fallout, for partners who retain shared financial liabilities after divorce.

Options to Consider

If you are the in middle of a legal separation, one of the most positive things you can do is talk about the distribution of property and liabilities. That includes a conversation about the ownership of your timeshare property.   Sometimes the spouse who has the higher income agrees to take the timeshare, and it is deeded to that spouse in the divorce.   Unfortunately, that can also mean decades of maintenance fees and membership costs for a timeshare that may not be used, now that the family situation has changed.

While getting divorced, neither spouse may wish to assume liability for the property, or refuse to share liability.  This can result in defaulting of the timeshare payments.  It can also result in increased costs for late fees and penalties, and possible damage to your personal credit.   All of which can make the difficult road of divorce that much harder.

Speak with your divorce attorney for specifics regarding your unique situation, and dispersion of assets and liabilities.   But when it comes to your timeshare, ask your attorney if canceling your contract would be the best financial option.

Consult with American Consumer Credit© about a legal pathway to cancel your timeshare.  We are not a resale or timeshare rental service.  Our attorney lead team has one role; to help you dissolve your timeshare contract legally, while preserving your personal credit rating.

Start by calling us at 1-800-587-EXIT for a free consultation.