like everything, credit is all relative....
looking at letting the timeshare foreclose and it goes on your credit report for seven years, will it really affect you?
1. You already own a home, so you most likely won't be shopping for a mortgage during that time.
In uncertain economic times, it's hard to tell if you'll be out of work and have to relocate. That could mean unexpectedly having to find a new home. Even if you rent, they'll look at your credit record to determine the likelyhood you'll be able to meet your obligations.
2. Although a foreclosure or even a bankruptcy stay on your credit report for 7 years, the real negative affect for loans, etc usually wanes by the 3rd year.
When my ex-wife defaulted on the car and the house, forcing me into bankruptcy, I found this statement to be anything BUT true. That ding on my credit adversly affect me ability to get decent loan rates long after that magical 7th year when it dropped off my credit record. There's a lot more that goes into your credit score than just that bankruptcy or foreclosure. This, IMO, is a very bad myth. I suppose some people who don't have need for credit won't notice it much but I certainly did.
3. Also, your credit only matters right now if you wanted a mortgage, a new credit card, or a car in the next 12 months. Once that foreclosure is on your credit report for about a year, a car loan is possible, although expect some crappy terms.
This is so unrealistic I don't know where to begin. Your credit score can affect things like you ability to get a cell phone contract, how much you pay for liablity insurance and the rate you pay on your credit cards. A bad credit rating affects many more aspects of you life and, that foreclosure affects you ability as to what sort of terms you'll get on ANY credit you might need to ask for.
Crappy terms? You bet they're crappy terms. I have a son who has no foreclosures on his record but, he has an issue making payments on time. He doesn't have a lot of credit and pays cash for most purchases. Even without a forclosure or bankruptcy on his record, the best he could do on a car loan was 26% interest.
The best part, bad credit stays around a LOT longer than most people think or realize. 1 year is wishful thinking. I wasn't able to buy a car without a huge downpayment or a co-signer for close to 10 years after going bankrupt. At 5 years post bankruptcy I thought about getting a cell phone. All it would have taken was a $500 deposit! The first car I purchased after sinking my credit rating was with my mother co-signing and was at 18% interest. The next car wasn't a lot better but, it was closer to 10%. It was well over 10 years before I was able to purchase a car and get those favorable terms you see advertised all the time. I hate to think how much money that cost me over the years and, it lasted a LOT longer than just a 2,3 or 4 years.
All that advice I got about what it wouldn't do before things went bad was from people who either didn't need credit, didn't care or hadn't been through a foreclosure or bankrutcy. It was ALL bad advice. I'd have been better off looking for alternatives that would have dinged, but not sunk, my credit rating. A bad debt of any kind will have a very adverse affect on your credit rating, you ability to get credit and your ability to get any sort of contract for the next several years. Sure you'll be able to get a little something somewhere down the line but, the lingering affects last much longer than popular myths will lead you to believe.
Considering all of this, if the timeshare foreclosure will allow you to stay in your current home, I think its a no-brainer. I am not an attorney, but I have experience with some credit situations, as always, be sure to consult an attorney, etc.
This is one thing I can agree upon. I'd let the timeshare go long before I let my home go. Sometimes it's a matter of picking the poison that's least toxic. But, for people to say a foreclosure of bankruptcy won't matter much, won't hurt much or will go away sooner than a several years, well, they're living in a fantasy world or just don't understand how many different ways a bad credit score can affect and alter your life.
I don't know where people get it in their heads that a bad credit record only affects you for a couple of years or, only affects you if you want to buy a big ticket item but, it's really a bad idea.
