What will happen if i stop paying my timeshare?

Question

We just got it a couple of months ago. But probably wont even use it, certainly don't need it

Answer 1

1. The foreclosure will be visible on your credit history. Lenders will take it into consideration that you didn't pay a debt before loaning you additional money. You will either not get the new loan or will pay a much higher interest rate.

2. The timeshare lender will report the foreclosure to the IRS. They will show the amount of money that was still owed at the time of the foreclosure as well as the value of the property at the time it was sold.

Let's say you paid $10,000 for the timeshare, had a remaining balance of $8000 and the timeshare is now wroth $4000. For tax purposes you have a $4000 non-deductible loss (timeshares are personal use property) and a $4000 cancellation of debt income. If you are not insolvent or bankrupt, the $4000 will be added to your income in the year of the foreclosure as 'other income.' (The loan is considered separately from the property so the $4000 loss doesn't reduce the COD income at all.)