Consider this a public service announcement: Do not buy a timeshare.
In bankruptcy, we run across dozens of people every year who bought a timeshare. In 25 years of handling bankruptcies, I cannot remember a single person who did anything other than give up the timeshare as part of the bankruptcy filing. The bankruptcy trustees are always on the lookout for assets they can sell. I cannot remember a single instance when any of those trustees took an interest in selling a timeshare.
The way most people come to own timeshares is on vacation. They get caught up in the moment, seduced by an impressive resort tour and slick presentation about the benefits of buying a timeshare. Sometimes, it is a promise of an open bar or a cash payment for sitting through that presentation.
The resort will usually pair up a salesman with each couple listening to the presentation. For the minimum two-hour presentation, you have your new best friend hanging out with you, telling you what a good deal you are about to get! The immediate downside of the presentation is that you lose between a few hours and an entire afternoon of your vacation time, listening to information about one of the single worst investments you could possibly make.
The salesman will usually tell you the timeshare is an investment and will go up in value. They will pitch the idea that you can rent your luxury condominium to other vacationers, if you are not able to use it yourself. They will tell you that the points are transferable to another vacation resort, if you do not want to take your vacation to this same place every year.
Timeshares almost never go up in value. When you try to sell it, you will not have the benefit of a team of salesmen individually working prospective purchasers for the sale. The points are transferable, but they usually leave out the fact that you will have to pay a fee to use the time at a different resort. They play down the cost of maintenance fees at the facility (or don’t mention them at all). They neglect to point out the fact you will be paying interest on this expensive investment at a rate higher than some automobile loans…andyou will pay property taxes on this condominium as well.
Once all the units are sold, it is not uncommon for the maintenance on the properties to be neglected and the entire complex to fall into disrepair. After all, they do not have any more prospects to tour the resort, and the salesmen have moved down the beach to the next hot property.
If you figure out the cost of ownership, which includes the interest and other fees, you will almost certainly come out cheaper renting the very unit they are pitching you, instead of owning it.
While they are usually not the main reason people file for bankruptcy, timeshares always something brought up at the consultation, because almost everyone wants out.
