Collections? Can The Resort Affect My Credit Score?
In other cases, the timeshare was sold in a fraudulent manner and the client was
not fully aware of all of the fees that would be involved for the monthly payments, maintenance fees, special assessments, or other additional fees when using the timeshare. During the sales presentations, the timeshare salespeople often verbally misrepresent the amount or frequency of payments of these fees that will charged. In actuality, the fees are very different, and are stated somewhere in the fine print of the contract, or in an Operating Rules document that is referred to in the contract, but never provided to the client prior to signing. Only the written contract is valid in the eyes of the law, so false verbal promises about low fees are another method of inducing the clients into purchasing fraudulent timeshares, without fully understanding the financial commitment involved.
Each situation and contract is different; however, if you do not make the payments, the timeshare developer will likely take you to collections after you miss your first payment. They may report you to the Internal Revenue Service (IRS) or Canada Revenue Agency. This can ultimately affect your credit score, making future financial investments very difficult.
They are several rumors that if the timeshare was purchased in Mexico, collections agencies are not able to affect your credit in the USA or Canada. This is not true. If you have signed a valid contract and/or promissory note with a timeshare developer, you have an obligation to pay them until the balance is paid off of the purchase price, or to pay the annual fees for the time period outlined in the contract.
A common method of payment for timeshares is by credit card. Upon realizing that their timeshare purchase was a scam, people will dispute the charge with their credit card. Many times the initial dispute is won, and the charge will be credited back to the credit card. Even though the dispute has been won with the credit card company, you can still be taken to collections as the resort will state that they have a valid contract and request another form of payment.
If you default on your payment, you may receive correspondence in the form of mail, emails or telephone calls from collections agencies such as Concord Servicing Corporation, Resort Recovery Solutions, Monterrey Financial Services, or Textron Financial Corporation. They will try to contact you through every avenue possible to collect the debt owed. Some clients have even commented that they have contacted them at their work and on all their cell phones, including their teenage daughters cell phone. They can be very aggressive in their collection tactics, almost verging on harassment, making an already difficult situation even more uncomfortable for the client.
In order to ensure that the collections agencies are effective, the resorts only pay them on a contingency basis. As such, the collections agencies only get paid if they are able to collect from the client who is in default of their payments. This causes the debt collectors to be more ruthless in their collections tactics as they want to ensure that they are not wasting their time and get paid for their services.
As a consumer it is very important that you are aware of your rights and the laws and acts put in place to protect you from harassment by collection agencies. The Federal Trade Commission, the consumer protection agency in the US, is responsible for enforcing the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using unfair, abusive or deceptive practices in their collection efforts. There are several restrictions placed on debt collectors; however, as an educated consumer, it is important to know what they can and cannot do so they you can ensure that they are following legal protocol. For example, debt collectors are not permitted to call before 8am or after 9pm unless you have agreed to speak to them at that time. They are not permitted to call you at work if you have advised them, orally or in writing, that you cannot receive calls there. These are just a couple of examples of the restrictions outlined in FDCPA.
Even if you are a true victim of timeshare fraud and you feel your contract is invalid, the timeshare company can take you to collections if you fail to make payments. In order to avoid being taken to collections and damaging your credit score, it is very important that you properly cancel your contract with the resort before stopping to make payments.
by: JOSE GONZALEZ
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