Timeshare apartments are wildly popular — and often lead to buyer’s remorse. Here’s how to unload one without losing money

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That hasn’t worked either, as we now have debt collectors calling, and we don’t want to hurt our good credit rating. So now we are wondering whether we should pay up or not, and how to finally get rid of it?

Thanks so much,

Timeshare Tina

Dear TT:

Freeing yourself from this obligation is more time-consuming than the two hours it took to get involved in it. You are not alone: Almost 9 million people own a timeshare. Nor are you unique for regretting the purchase. Timeshares are a depreciating asset and ongoing expense, without the flexibility of full ownership. Plus, the added burden of expenses that grow beyond the cost of renting in the same resort.

Your situation is different because you have already essentially turned it over to the debt collectors because of lack of payment.

Here are the next steps to take to rid yourself of this commitment: 

1. Contact the company with which you signed the timeshare ownership agreement in 2007. Find out if your lack of payment has voided the contract. For many, this will void the contract and your ownership will return to the original company. Request this in writing for your records.
2. Settle with the collection agency by paying the outstanding amount. This is a debt now owned by them, not the timeshare company, and needs to be handled separately. 
3. Be attentive to your credit report. With good credit, you need to be proactive and explain this blip on your report. Write a hundred-word statement on what happened and request the credit reporting agencies attach it to your report. Find them here.
4. Do not forget taxes. There may be tax implications to however you dismantle this albatross. Be sure you have the expense history and purchase amount to provide your accountant.

For others contemplating shedding their timeshare: The contract you signed holds the key to your options as you consider the next steps.

The contract will define the type of timeshare you own. A right-to-use property is one that gives you the right to use the condo for a specific amount of time each year. Most have an expiration date, which can be anywhere between five and 99 years. A deeded property means you actually own a piece of the property and have a deed and bill of sale. This is considered legal real estate and you own it until you sell it.

The first place you need to reach out to is the company who sold you the property. Ask for the process to deed it back to them. Many would rather have you surrender it back to them than to go through the process of foreclosure and debt collection. 

If the company that sold it to you is not helpful, gather valuable information from the American Resort Development Association (ARDA). They may be useful if you are also considering reselling the timeshare. Plus, if you have not kept the original contract or good records, the ARDA may be able to help.

Stay away from online timeshare-exit companies. They are sketchy, at best, and do not deliver on their promises. Some companies advertise it will take $5,000 or so and over a year to get out of a property. Do not throw good money after bad. They operate on fear, including estate planning issues. For example, anyone who inherits anything, including a timeshare, has the right to decline it.

Timeshare-exit companies are unregulated and regularly go bankrupt. The companies that sell timeshares do not partner with timeshare-exit companies, as some advertise.

Also stay away from any person who reaches out to you to sell the property via phone or email. A young woman, Maureen, was so desperate to separate herself from the expense during Covid, she listened emotionally rather than with objective ears. The company wanted several thousand dollars upfront to find a buyer. She paid it and only caught on to the predatory scam when they called again, saying they had someone ready to buy and for a thousand dollars more, they would seal the real estate deal.

­­­There are two helpful websites — the ARDA and the Federal Trade Commission.

If you tend to be an impulsive buyer, do not go to any presentation on timeshares — no matter what they offer you for “free.” Remember you are signing a contract. This is a long-term contract that should not be done on a whim. No matter how good the deal. As with anything if the deal is only good for today, walk away.

Vacations are a discretionary cost. Once you have a timeshare, you may have a property to go to, but you have to pay whether you go or not. What happens when you do not have other money? Or a bad year. Or illness or a pandemic where you cannot travel to the destination. This will still be an expense. And despite being part owner of a property, you only own 1/52 (one week out of 52) of the property. And you are governed by a homeowner association with the power to add fees and institute changes to the outside of the property. Your vote and your voice will not count in future decision making as if you owned a property outright.

The best way to exit a complicated and costly situation is to not sign anything while you are relaxed and on vacation.

CD Moriarty is a certified financial planner, a columnist for MarketWatch and a personal-finance speaker. She blogs at MoneyPeace.