Stop making payments

[Zach197]

Hello. Does anyone know what happens if one stops making monthly payments towards their direct dvc financed contract all together? I know direct dvc financing does not show on a credit report, so im curious what would happen. I figured points would freeze, just wondering if it would be reported to the credit bureau?

 

[AstroBlasters]

https://www.disboards.com/threads/effects-of-defaulting-on-resale-loan.3916145/

 

[Bearval]

Hello. Does anyone know what happens if one stops making monthly payments towards their direct dvc financed contract all together? I know direct dvc financing does not show on a credit report, so im curious what would happen. I figured points would freeze, just wondering if it would be reported to the credit bureau?

Florida law does not allow deficiency judgements for timeshares ( simple terms this means that you cannot be sued for the difference of what is owed on the loan from what it sells for when it is repossessed ) , however I believe you can still be reported to the credit bureau for defaulting on a loan which will impact your credit score. This is why Timeshare loans are usually higher than a personal loan. If you get a personal loan and use that to purchase a Florida timeshare and default you will be on the hook for what is owed on the loan and from what it sells for.

 

[bakerworld]

Hello. Does anyone know what happens if one stops making monthly payments towards their direct dvc financed contract all together? I know direct dvc financing does not show on a credit report, so im curious what would happen. I figured points would freeze, just wondering if it would be reported to the credit bureau?

If you cannot pay, just sell it. Price it low and it will probably set taken immediately by ROFR.

 

[Matty B13]

If you are going to sell, all your maintenance fees have to be paid in full before you can sell. FYI.

 

[Bearval]

If you cannot pay, just sell it. Price it low and it will probably set taken immediately by ROFR.

I am pretty sure you will not be able to sell if the funds from the sale will not cover the loan unless the lender agrees to the sale.

 

[RoseGold]

Just sell it. Foreclosure on a direct contract is a huge, expensive mistake, unless you don't care if it forecloses? It's unlikely you are underwater, but it is possible.

You need to talk to a broker now and figure out the math.

There are situations where foreclosure makes sense, like I don't see why everyone wouldn't borrow their points and foreclose in the last year of 2042 contracts with no points left.

This is a math discussion, and you have provided zero math to give meaningful advice.

And of course it gets reported against your credit.

 

[sndral]

Hello. Does anyone know what happens if one stops making monthly payments towards their direct dvc financed contract all together? I know direct dvc financing does not show on a credit report, so im curious what would happen. I figured points would freeze, just wondering if it would be reported to the credit bureau?

Financing through DVC directly reportedly does not show as a debt on your credit report for debt/income ratio purposes, however it will show on your credit report once DVC files a lien & initiates foreclosure for nonpayment. I’ve also read they report late payments, but don’t know about that.
I believe you cannot bank/borrow your points, cannot make reservations, & existing reservations are cancelled - but I’m not sure on the timing of when those consequences kick in.

 

[Bearval]

Just sell it. Foreclosure on a direct contract is a huge, expensive mistake, unless you don't care if it forecloses? It's unlikely you are underwater, but it is possible.

You need to talk to a broker now and figure out the math.

There are situations where foreclosure makes sense, like I don't see why everyone wouldn't borrow their points and foreclose in the last year of 2042 contracts with no points left.

This is a math discussion, and you have provided zero math to give meaningful advice.

And of course it gets reported against your credit.

Good Luck in trying to get financing for a contract that runs till the end of the contract. If you do find lender you are going to pay a sky high rate for the risk they are taking, since if they have to foreclose they could be stuck with a worthless contract. I would think DVC would limit borrowing or at the very least require dues to be paid upfront if you are trying to borrow points from the last year on a contact.

 

[RoseGold]

I would think DVC would limit borrowing or at the very least require dues to be paid upfront if you are trying to borrow points from the last year on a contact.

The expiring contracts are for sure an issue, as they approach worthless, it's probably not even worth foreclosing to Disney. Just closing costs might make moving these around not worth at the end of their lifespan.

I can see DVC requiring dues pre-payment for borrowing points, I can also see 2042s leaving the system and only being able to use home points. This would for sure give you somewhere to use your BW points, but would lock you at BW.

This expiration scenario is one of the reasons I've really eyed BW/BC, but it's not a buy for me because I don't plan to be going to Disney in the late 2030s where this is interesting.

Intentional foreclosure is very much already a thing in all timeshares. It's recent for DVC, because it was hard to be underwater after a few years. But plenty of people are underwater for years now, especially with resale restrictions. It was kind of the point to make resale crater. There are many scenarios foreclosure might be the right answer for the owner. It's math.

 

[Robbie Cottam]

Have you tried calling member administration?

There are a few deeds on the Orange County website that at list as in lieu of foreclosure…

You may be able to just give the contract back….

I have never scene Disney put even a foot note on my credit report, and honestly I don’t think they care to, they will make money off of your contract either way….

I would call M Admin and work it out.

As far as a refi, right now I know of two companies, the rates are between 12 and 17 percent…

And terms are up to 10 years.

I believe on is a board sponsor, and if you send me a pm I’m happy to put you in contract with the other.

Both are no hassle, very helpful…
I have had good luck with both.

 

[Brian Noble]

if it would be reported to the credit bureau?

It can be. I don't think anyone knows for sure whether or not it will be.

There is also the chance that any balance on the loan will be reported as a taxable event via a 1099-A or 1099-C.
https://www.irs.gov/taxtopics/tc432

I'll echo everyone else's observations: you might be better off selling it. If you are still early in your loan payments, you are probably under water (meaning: your sales proceeds will be less than you owe) and you will need to bring cash to closing. That might end up being better for you than taking a potential credit hit--particularly in this period of non-trivial interest rates.

 

[tom1944]

It can be. I don't think anyone knows for sure whether or not it will be.

There is also the chance that any balance on the loan will be reported as a taxable event via a 1099-A or 1099-C.
https://www.irs.gov/taxtopics/tc432

I'll echo everyone else's observations: you might be better off selling it. If you are still early in your loan payments, you are probably under water (meaning: your sales proceeds will be less than you owe) and you will need to bring cash to closing. That might end up being better for you than taking a potential credit hit--particularly in this period of non-trivial interest rates.

I used to see this all the time at work.

 

[Zach197]

Appreciate the info. We have zero intentions on not paying, just curious what the consequences would be

 

[Yankee626]

The Mouse can get very Angry when the checks don't clear !!!

 

[DaveNan]

Appreciate the info. We have zero intentions on not paying, just curious what the consequences would be

Oh, you should have told us you were "asking for a friend".