Using a home equity loan to pay credit cards - from the pan into the fire ...

Whenever I see advertisements offering home equity loans and suggesting people use the loans to pay credit card debt, I cringe. If you are thinking about doing this, there is chance you are already in serious financial trouble. By using your home to refinance your credit card debt, you are betting your home you will be able to pay it off.  If you lose that bet, you stand a good chance of losing your home.

Image courtesy of ratch0013 at FreeDigitalPhotos.net

Credit cards are usually unsecured debt. That means they do not place a lien against any property. Your promise to pay is the only thing the credit card company has. These are the type of debts that can easily be discharged in a Chapter 7 Bankruptcy and the debtor does not risk the loss of any property.

When you use a home equity loan to pay off the debt, you pledge your house against the new debt.

Once you complete the transaction, the bank has an interest in your home. If you fail to pay the new debt, the creditor can foreclose on your home to recover the debt. Bankruptcy under Chapter 7 will not protect you from this debt and protection under Chapter 13 may be limited.

If you are thinking about using your home to refinance your credit cards, consider carefully. Ask yourself if you are in deeper financial trouble than you have admitted or realized. Be careful you don't dig your hole any deeper.

If you are still going to consider using your house to pay down unsecure debt, this article gives you a couple other things to consider - "Using Equity in your Home to Pay Credit Card Debt…A Good Idea?" - http://bit.ly/1HW1Idh

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.

#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania