If you have been informed that your timeshare developer has gone bankrupt, it is understandable that you might be concerned. It is very rare that your timeshare right to use will be removed altogether, but other changes are likely to take place that you should be aware of. In this post, we will look at what will happen should your timeshare be affected by bankruptcy, and what your best course of action should be.
What Happens When Timeshare Developers Go Bankrupt?
Usually, when a timeshare developer goes bankrupt, a new developer will purchase the resort. This new developer will probably employ their own management company to take over the day to day running of the resort. This may be an entirely seamless transition, but not always. We often hear from timeshare owners who find that the new management company changes aspects of the resort’s running in a way that is unacceptable. We hear of resorts being improperly maintained whilst maintenance fees dramatically rise.
Maintenance fees: If, under new management, your timeshare maintenance fees suddenly rise, it is important to query the changes. You should request a breakdown of the costs that make up the total value of your maintenance fee and compare these with the fees charged by the previous management company. Hopefully, you already have a breakdown of these previous charges to hand, but if not, it is possible that you may be able to request such a breakdown from the previous management company. They may not have gone into administration with your previous resort developer, so will hopefully still be available to process this request if needs be. If you find there to be a serious discrepancy between the amounts charged, you should present this to your new management company. Unfortunately, it’s unlikely they will take heed, but keep hold of the evidence, as this will come in handy should you wish to launch a legal case to either leave your timeshare contract or claim compensation for misappropriation of funds or for any other misdemeanours.
New resorts: In some cases, a new buyer for the development may not be forthcoming. When this happens, your timeshare ownership may be transferred to a new resort. This, again, may be a positive thing. However, we have heard from disappointed timeshare owners who have found that the new resort to which they’ve been moved is in a less desirable location, or is of inferior quality to the one which they had chosen and paid for.
In all instances, whenever a new developer takes over ownership – including when you are to be moved to a new home resort – a new contract will need to be signed. This is where you must pause.
New Contracts: If you have been happy with your timeshare up to this point, signing the new contract may seem not to be a problem. However, you should consider the possible scenarios outlined above. Though you may have had a good time with your timeshare up to now, things may change under new management. Before proceeding, enlist the services of a timeshare lawyer to go over this new contract in depth.
It is not unknown for new timeshare developers to use the opportunity of new contracts to bind existing timeshare owners into longer contract terms, or to introduce new clauses into the contract that may be questionable either practically or legally.
It may also be the case that you have been considering timeshare release for some time, and this turn of events presents an opportunity to extricate yourself from the contract in a much simpler way than before. That’s not to say that you can simply refuse to sign the new contract and walk away. You will still need advice from a timeshare legal expert to help you take the right course of action in order to successfully and legally leave timeshare for good.
Incentives to continue: You should also be aware that the presentation of a new contract may come with an array of attractive incentives. In exchange for signing a new timeshare contract with the new developer, you may be offered an upgrade on your timeshare unit, a bonus week or a free gift of some kind. Beware: these may be bribes – a trojan horse to encourage you to agree to terms that may be problematic.
Total loss: Occasionally, we come across the unfortunate case where there is no buyer for the resort following a timeshare bankruptcy and it is forced to close down. As the resort has gone bankrupt, there is no money available to compensate you for the significant financial loss incurred.
If your timeshare is covered by an insurance policy or if you have paid for your timeshare using a credit card, or through a loan, you should probably be covered should such an event occur. There may even be clauses in any other insurance policies you own, which can help you through this situation.
If you have the unfortunate scenario where you don’t have the backup of any of the above options, it is extremely important that you seek legal advice immediately. A specialist in timeshare law will be able to guide you in the right direction and hopefully get you timeshare compensation for the money you have lost.
Even in the most dire of circumstances, it is rarely the case that you will be forced to deal with such a significant loss with no recourse to compensation. There are various different consumer laws as well as those related directly to timeshare in place to prevent such a situation from leaving you out of pocket.
That said, it is worth remembering that timeshares drop considerably in value as soon as they are purchased. This means that it may be difficult to ascertain exactly what the timeshare is now worth, less still to recoup any significant sums on the original financial outlay. This is where the importance of a timeshare expert comes in. Understanding your rights and acting upon them may be difficult alone, but someone with experience in timeshare law and how it can be used to your benefit is your best chance of coming out of a timeshare developer bankruptcy unscathed.
To find out more about what to do if your timeshare company goes bankrupt, get in touch with the team at TimeshareCompensation.co.uk. We will be able to offer you help and advice and to guide you in the right direction in order to put things right. Wherever further action is required, we have the skills, experience and tools to ensure the best possible outcome, whatever your situation.