Law Office of Ginger C. Cord, PSC. - Bankruptcy
Free Initial Consultation

Local 859-963-2073

Toll Free 800-762-6916

Call Today

Pursue A Bright Financial Future
[an error occurred while processing this directive]
Freedom From Debt Is On The Horizon

Using home equity to tackle debt

Home equity can be used to consolidate and pay off debt. However, it is important that Kentucky residents who are considering this approach are aware of the advantages and disadvantages of doing so.

The loans and lines of credit that can be obtained from one's home equity typically have interest rates that are significantly lower than the rates for credit cards. The interest that is paid for home equity loans can also be tax deductible, while the interest paid on credit card debt is not. There are some risks that come with using one's home equity. Foreclosure may be a possibility if the home equity loan payments are not made on a timely basis. Homeowners may also end up being saddled with a loan that is more than the home is worth if the value of the home drops.

People considering home equity loans should also be mindful that the loans can have terms that require payments for 10 years or more. If the cause of the debt is related to unhealthy spending habits, the issue will not be addressed. For people who have good credit, it is advisable for them to seek other financial options that do not require them to put their home at risk. Homeowners with less than stellar finances should avoid moving unsecured debt, like credit card debt, which can be discharged in bankruptcy, to secured debt that in many cases cannot.

Individuals with considerable debt might want to consider filing for bankruptcy. A bankruptcy attorney can outline the eligibility requirements of Chapter 7 and Chapter 13, which are the two most common forms available to individual consumers.

No Comments

Leave a comment
Comment Information