default on maintenance fees

[tom401]

We could go on for days about whether the financial investment makes sense for a family. Assume one's financial position does not change, BUT the one risk with DVC is you have this contract for the next 40 years, but at some point in say 20 years, you don't visit WDW for whatever reason, but you still have this annual maintenance fee to pay.

ASSUME
You already invested and got return for the up front point purchase (say 15,000 or 20,000). The contracts are ending within the next 10 to 15 years, so reselling may not make sense.
What if you stop paying the maintenance fees, in year 2030? Do your points just become worthless? Are they collateral for disney to recall to collect past due maintenance fees?

As far as my situation, the DVC makes sense for the next 10 to 15 years, but after that I will be stuck with this maintenance fee. I am not doing this as an investment, so I am thinking of alternatives.
thanks

 

[RobDoc]

Maintenance fees are due by January 15 each year (or arrival at the reosrt - whichever comes first) and are delinquent (with additional charges) after February 15.

If you have not paid the fees by February 15, you won't likely have access to MS until they are paid and I'd expect that checking in for a reservation after that date might be a bit frustrating.

Basically, DVC will have full use of your points, since you won't be able to use them yourself. If the fees go unpaid long enough, they can start reposession.

Before allowing that to happen, you might still consider renting your points, selling your contract or even donating your membership to a charity.

 

[Dean]

It would be just like any other debt where they could go after your other assets and report your default to the credit reporting services. Not a biggie for some but it is for others.

 

[bicker]

While with regard to DVC we don't expect to have this problem, with other timeshares it is an issue, and charities won't accept ownership of something which ostensibly costs more to maintain than it is worth. In that case (and presumably this would be the case if DVC ever falters), things will go as Dean suggests: It would be just like any other debt that you default on.

 

[Maistre Gracey]

If there are 15 years left on the contract, I'm certain it would be worth the effort to sell it. You would obviously get something for it, perhaps even a tidy sum, and your credit rating would be intact.

MG

 

[Mtnman44]

In what universe does selling it "not make sense" but letting it default and loosing everying does?

 

[tubtruck]

Even if it had only 2 years left at todays rates it would be still a good sale, 260 points around $1200 maintenance, would get 2 weeks studio, cost for cash over $3000 so should think selling at any time will be a problem though you may only get a few cents a point at some time very near to 2042.

 

[dunnhorn]

but after that I will be stuck with this maintenance fee. I am not doing this as an investment, so I am thinking of alternatives.
thanks

Well - remember you could technically never be "stuck" with the maintenance fee if you rent out your points to cover the cost of that fee. Even though the points may not have much resale value with 1 or 2 years left on the contract, they will still have full rental value... Who knows what it will be at that time.

It would require a bit of sweat equity, but if you were wanting to avoid a financial obligation it would be more worthwhile than having your credit rating negatively impacted.

HTH

 

[tom401]

It would require a bit of sweat equity, but if you were wanting to avoid a financial obligation it would be more worthwhile than having your credit rating negatively impacted.

HTH

That is a good point - by that point, the 'market' will have reacted to the expiring contracts/rental angle (especially if all those with expiring points re-upped with a new contract) and there will be borkers dedicated to renting points - much as the resale market sprouted up. So the sweat equity may be less of an issue the 5 to 10 years of the contracts.

thanks

 

[JudyTL]

To keep the price up, Disney might offer a special on newer timeshares to assist the selling price. Also if Disney has other Timeshares then.. a person might be able to apply the points towards a more expensive vacation in another place. 35 years is a long way .. I know my daughters will enjoy vacationing with their families until they are about 46 years old. That is one nice gift... Almost a lifetime of free vacations to enjoy. I am not thinking of selling but making a collection instead of figurines.. I am picking up the timeshares.

 

[dumbo71]

We could go on for days about whether the financial investment makes sense for a family. Assume one's financial position does not change, BUT the one risk with DVC is you have this contract for the next 40 years, but at some point in say 20 years, you don't visit WDW for whatever reason, but you still have this annual maintenance fee to pay.

ASSUME
You already invested and got return for the up front point purchase (say 15,000 or 20,000). The contracts are ending within the next 10 to 15 years, so reselling may not make sense.
What if you stop paying the maintenance fees, in year 2030? Do your points just become worthless? Are they collateral for disney to recall to collect past due maintenance fees?

As far as my situation, the DVC makes sense for the next 10 to 15 years, but after that I will be stuck with this maintenance fee. I am not doing this as an investment, so I am thinking of alternatives.
thanks

I agree with Doc and Dean for starters.

Next this is why I STRONGLY recommend not letting things get this far. You might want to consider my trade up or musical resorts theory. Make sure you own a resort with a longer expiration date. If you own OKW, HH, VB, BWV or VWL now might be a good time to up the term by purchasing SSR or AKV. Sell the older resort and then enjoy the next solid 15 years of ownership with a resort more likely to hold resale value. You could keep trading up every 10 years if you wanted to. It may cost you some but the price per point increase may be offset by the lower dues of a newer resort and the possibility of a higher resale value return when you sell.

Don't default, pm if you want more details on this plan I have.