Timeshare Foreclosure: How It Works, What It Costs, and Who Ends Up There

What happens in a timeshare foreclosure?

When an owner stops paying the maintenance fees or the purchase loan, the resort’s association or the developer can foreclose, take the timeshare back, and sell it. Foreclosure does end the ownership. It can also stay on your credit report, generally for up to seven years, and longer for a credit application of $150,000 or more, such as a mortgage. Depending on your state and the route the creditor uses, it can leave a deficiency claim or a canceled-debt tax question behind. This page explains how the process works and who ends up in it. Foreclosure is the last route on our list, and we do not recommend it.

How does a timeshare foreclosure start?

Two different debts can lead here, and many owners carry both.

Unpaid maintenance fees. Florida’s timeshare act is the clearest model. The managing entity has a lien on a timeshare interest for any assessment from the date the assessment comes due. The managing entity can deny a delinquent owner use of the resort, including reservations, and for that purpose an owner counts as delinquent 60 days after the assessment is billed or due, whichever is later. Delinquent assessments can carry interest at the highest rate the law permits, plus a late fee of up to $25 per delinquent assessment. Collection costs, including reasonable collection agency and attorney’s fees, are charged to the owner and secured by the same lien. Before sending the account to a collection agency, the managing entity must give the owner at least 60 days’ warning.

An unpaid purchase loan. Developer loans are typically secured by the timeshare. Hilton Grand Vacations treats a loan as in default at 121 days past due and says it recovers the interval through a deed in lieu of foreclosure or a foreclosure. Marriott Vacations Worldwide treats loans in its legacy Marriott portfolio as in default after 150 days past due. It also says it does not accept payments during the foreclosure process unless the payment covers all past due principal, interest, fees, and penalties and fully reinstates the note. Once the process starts, a partial payment may not stop it.

How does Florida’s trustee foreclosure work?

Florida built a separate track for timeshares that runs outside court. Section 721.855 covers liens for unpaid assessments, and section 721.856 covers mortgage liens. In its statement of purpose for this part of the law, the Florida Legislature says it recognizes “that nearly all timeshare interest foreclosures are uncontested.”

1. Notice. A trustee mails a notice of default and intent to foreclose, with an objection form. The notice must tell you that if you do not object, “you will not be subject to a deficiency judgment” even if the sale brings in less than you owe.
2. Objection. If you sign and return the objection form, the foreclosure of that default proceeds by judicial foreclosure only.
3. Cure. You can cure the default and redeem the timeshare by paying the amounts secured by the lien at any time before the trustee issues the certificate of sale. After that, there is no right of redemption.
4. Sale. At least 30 calendar days must pass after the notice of default is perfected. The trustee then records a notice of sale and mails you a copy within 3 business days. The sale is held not less than 30 calendar days after the notice of sale is recorded, and it can take place online.
5. Effect. A trustee sale “releases the obligor’s liability for all amounts secured by the lien,” and the lienholder has no right to a deficiency judgment.

For a mortgage lien, the mortgage must contain a statement that it can be foreclosed through the trustee procedure, and the trustee must hold the original promissory note. For assessment liens, the statute says the trustee procedure does not impair the lienholder’s right to bring a judicial foreclosure instead.

Can you still owe money after the foreclosure?

That depends on the state and the route. In Florida, the trustee route bars a deficiency judgment, as above. The court route is different. Florida lets the managing entity foreclose its lien in court and also sue for a money judgment for the unpaid assessments without giving up the lien. For mortgage foreclosures, a deficiency decree is “within the sound discretion of the court.” That is the trade-off inside the objection form: objecting moves the case to court, where a deficiency becomes possible. Whether to sign it is a decision for a Florida attorney who has read your notice.

South Carolina’s Timeshare Lien Foreclosure Act has a similar rule: after a sale under that article, the lienholder has no right to a deficiency judgment as to the lien foreclosed. Rules in other states differ. Put the question to an attorney licensed in the state where the resort sits before a sale date is set.

Will you owe taxes after a timeshare foreclosure?

You might. The IRS’s general rule is that debt canceled, forgiven, or discharged for less than the amount owed is taxable. Lenders and other applicable entities must file Form 1099-C when they cancel a debt of $600 or more.

When the creditor takes property that secured the debt, the IRS treats you as having sold that property to the creditor. For recourse debt, where you were personally liable, your ordinary income from the cancellation is the amount by which the canceled debt exceeds the property’s fair market value. For nonrecourse debt, the IRS says you will not have ordinary income from the cancellation. The IRS also notes that if a creditor keeps trying to collect after you receive a 1099-C, the debt may not have been canceled.

Two exclusions come up. The insolvency exclusion applies to the extent your total liabilities exceeded the fair market value of your assets immediately before the cancellation. The principal residence exclusion does not fit a timeshare: IRS Publication 4681 limits it to a mortgage on your main home, and to discharges before January 1, 2026. Whether a particular foreclosure creates taxable income is a calculation with your numbers in it, so take the 1099-C and the sale documents to a tax professional.

How long does it stay on your credit report?

Negative information generally stays for seven years. The Fair Credit Reporting Act bars consumer reports from including most adverse information older than seven years, and accounts placed for collection or charged off fall under the same limit. For those accounts, the seven-year clock starts 180 days after the delinquency began. The seven-year limit does not apply to a report used for a credit transaction of $150,000 or more, such as a mortgage application. The CFPB says a credit reporting company can generally report most negative information for seven years, and can report a lawsuit or judgment for seven years or until the statute of limitations runs out, whichever is longer.

Disclosure: Candid Yak works with Vacation Ownership Consultants, a timeshare exit firm, and may be paid when readers hire it. We cite its published case data on this page where marked.

Whether a given resort or lender reports the account depends on that creditor. Vacation Ownership Consultants says timeshare financing does not always appear on credit reports and that it depends on whether the timeshare company reports it. Vacation Ownership Consultants also reports that a man who inherited a timeshare from his parents stopped making payments, and that his credit dropped about 80 points and he struggled to qualify for a new home loan. According to Washington’s attorney general, some customers of Reed Hein, an exit company that at times told customers to stop making payments to their resorts, may have been sent to collections or otherwise had their credit damaged.

Who ends up in timeshare foreclosure?

In ARDA’s 2026 study, commissioned by the developers’ trade group, about 93% of maintenance fee accounts were current in 2025, which leaves roughly 7% that were not. Hilton Grand Vacations reported a default rate of 9.86% on its timeshare loans in 2025 and 10.77% in 2024. Marriott Vacations Worldwide said in its 10-K that it believed year-over-year maintenance fee increases for 2023 and 2024 “were driving continued elevated delinquencies and default rates.”

Owners whose finances changed. In a client video testimonial Vacation Ownership Consultants published, a man who bought a timeshare more than 30 years ago describes losing his job in 1994, three months after his wife left hers to stay home with their children. The fees were about $600 to $700 a year, and they fell behind. “Then we ended up in foreclosure,” he says. He paid his way out of it because he did not want to hurt his credit.

Owners an exit company steered here. According to Washington’s attorney general, Reed Hein “considers foreclosure a successful outcome,” and its settlement required the company to disclose that some exit methods may lead to foreclosure. Minnesota’s attorney general warned in 2025 that some exit businesses “might arrange for the consumer to stop paying the debt and force a foreclosure that can create more costs and harm the consumer’s credit.” The FTC lists “instructions to stop paying your mortgage or fees” as a sign of a timeshare exit scam. If a company you paid told you to stop paying, keep every document, report it to the FTC at ReportFraud.ftc.gov and to the attorney general, and take the file to an attorney. A company that steered you into default and kept its fee may give you a claim of your own.

The owners who keep paying. Foreclosures can shift costs to the owners who remain. Vacation Ownership Consultants reports that a Sedona, Arizona resort issued a $1,500 special assessment per interval in 2025 and cited more than 179 foreclosed intervals returned to the association, with 80 more in foreclosure proceedings, as a major shortfall.

What should you try before it comes to this?

If the timeshare came to you from a parent and you haven’t accepted it, talk to an estate attorney about disclaiming it before you use it or pay anything. Read the inherited timeshare page first.

Ask the developer in writing, and early, yourself or through your own attorney if you already have one. The FTC tells owners exploring an exit to “start by contacting your timeshare company directly,” and notes that some companies have exit programs. Vacation Ownership Consultants’ published process begins at the same place: “Contact your resort and check the resale market.” Ask for the surrender, deed-back, or hardship program by name, what it costs, and what it requires, and keep the answer. Some developers offer hardship help. Wyndham’s Certified Exit page offers owners with a loan balance a hardship exception application. Wyndham also asks owners to make it their “first and only call” and warns that working with anyone other than its Certified Exit Specialists may leave options “limited or nonexistent,” so let that conversation finish, with Wyndham’s answer in writing, before you contact any outside firm. Hilton Grand Vacations’ Member Solutions page lists payment plans, forbearance, and loan modification. Holiday Inn Club Vacations says owners forfeit its Horizons program if it detects a third-party exit company on the account, so apply to Horizons and wait for its written answer before contacting any exit firm, including for a free consultation. For Westgate, Rebecca Tushnet’s law blog reports that an exit company suing the developer alleged that Westgate has conditioned repossessions on an affidavit that the owner has not worked with “any timeshare exit company, lawyer or law firm.” Westgate disputes that the language covers all lawyers, and in a 2024 order the court called it “sweeping.” Ask the Legacy Program whether any such condition applies before you contact an exit firm. Ask all of this before an account goes delinquent, while every option is still open.

If the call turns into a sales pitch, sign nothing. An owner who says “I want out” often hears an upgrade offer instead. In ARDA’s study, 61% of 2025 sales volume went to existing owners, and the developers’ 2025 10-Ks put sales to existing owners at about 70% of Marriott Vacations Worldwide’s contract sales and 74% of Hilton Grand Vacations’, and upgrade sales at 72% of Travel + Leisure’s net VOI (vacation ownership interest) sales. For an owner who is already struggling with the bill, a bigger contract means a bigger fee. If an upgrade is the only answer you get, at the call or at an owner update meeting, treat it as a no.

Check the resale market, too. Look at what comparable weeks actually sell for. If yours could sell, a licensed real estate broker is a route, and the FTC says it is better to use a reseller that takes its fee after the sale.

Ask about a deed in lieu of foreclosure. Our deed-back guide covers the developer programs. Hilton Grand Vacations and Marriott Vacations Worldwide both name the deed in lieu as one of the ways they recover intervals. If the developer or association offers one, get the terms in writing before you sign: that it accepts the deed in full satisfaction of what you owe, that it waives any deficiency, and that the transfer will be recorded. Ask how it will be reported to the credit bureaus and whether a 1099-C will follow, and have an attorney read the agreement.

If the timeshare has no resale value and the developer refuses, or quotes a price you can’t accept, ask an attorney-backed exit firm for a free consultation and file review. Vacation Ownership Consultants’ process has you send your billing statements, purchase agreement, and any deed through its eligibility form. VOC then determines what your ownership may qualify for and reviews the file with you for free, and only after that do you decide whether to enroll for a one-time flat fee. VOC says it doesn’t “discuss billing until we’ve made sure you qualify.” Your own attorney is the route if you have a documented claim about the sale. A firm worth hiring reviews your documents before it quotes, and quotes one flat fee in writing. It names the attorney who will represent you, and you can look that attorney up with the state bar. It tells you in writing what happens to your fee if the developer refuses. It never tells you to stop paying, never guarantees a result, never claims a connection to your developer, and tells you when a free route is still open. See the red flags page for the full checklist.

If you already have a notice of default, take it to an attorney licensed in the state where the resort sits, before the cure or objection deadline passes. See hiring a timeshare attorney.

Disclosure: Candid Yak works with Vacation Ownership Consultants, a timeshare exit firm, and may be paid when readers hire it. This page’s author, Kira Fairbank, is a manager at Vacation Ownership Consultants. We cite its published case data on this page where marked.

This is general information, not legal or tax advice. Judicial versus trustee foreclosure, deficiency exposure, notice and cure deadlines, credit reporting, and tax treatment all turn on your state, your documents, and your numbers. Get an attorney licensed where the resort sits, and a tax professional, involved before a sale rather than after it.