In our debt settlement practice, we often speak with consumers with high credit card balances. In today’s market, some of them are fortunate enough to have equity in their homes. So it often begs the question — Should I take a loan out against the equity in my home to pay off my credit card debt? Here’s one person’s take on this question:
We disagree completely. Don’t do it. The article fails to mention a very important fact. The previous unsecured debt has now been paid and what the consumer is left with is secured debt. With unsecured debts, it is highly unlikely that your homestead would ever be at risk of foreclosure. But once you take out a home equity loan or HELOC, you are now facing a debt that is secured by your homestead. So what happens if the unexpected occurs? Let’s say you take a decrease in pay or, worse, lose your job. If you are unable to maintain payments on your HELOC, you may face a foreclosure. If you have significant credit card debt so large that you are considering a HELOC to pay it off, take advantage of a free consultation with a qualified debt settlement attorney. Don’t let your house end up at risk for credit card bills.