Debt Settlement Consolidation: Home Equity Loans
One of the options to settle your debts is through debt consolidation. The goal here is to reduce the original balance so it becomes a more manageable and affordable amount for the person in debt.
This is a program supported by the government to address the mounting issue of debts that a lot of Americans have. Due to the recession, a lot of them lost their jobs and are suddenly unable to pay for what they owe. This also bloated a lot of credit card debts because the lack of cash prompted people to charge their basic expenses just to be able to afford them. Several people have maxed out their cards without any hope of paying them off completely.
Debt settlement is perceived to be the best solution for both creditors and the people who owe them. The creditors are assured that they will receive even just a portion of what they lent while those in debt will be given an easier payment term. They will only have to pay for a portion while the rest will be forgiven.
Take note though, not everyone is approved for a debt settlement. A settlement may be the best option for you but not with the creditor. More often than not, they have lost their investment and they could be quite strict in agreeing to settlements. There are factors that will indicate if you qualify for this or not. The State you live in may also have different rules of qualification so best to do your research first. One for sure, you have to be evidently unable to pay due to lack of funds. If you are found to be paying off another creditor on time, another creditor may not be amenable to a settlement.
Risks to Home Equity Loans for Debt Settlement Consolidation
There are various paths to take in debt settlements and one of them involves getting a home equity loan that will help you pay off your other debts. Creditors may be more amenable to allow a revision in your payment terms if you use this option. However, there are risks involved that you may want to consider first.
One of them, and the most dreaded is you will be in danger of a foreclosure. If you cannot afford the monthly payments, do not take out a home equity loan out of desperation. Consider your finances carefully to make sure that you have a stable source of income in order to pay for the new loan you will take out. If you are basing your decision on the notion that you will definitely have an increase in income, then do not do it. Unless you are sure that the income increase will happen, try other options first. Otherwise, you may find yourself deeper in debt than when you started.
Another consideration is you will be unable to file for bankruptcy without losing your home. Filing for bankruptcy You will also be unable to use the other debt relief options like credit counseling and debt settlements. Bottom line is, if you suddenly find yourself unable to pay the home equity loan, you have no way to save your home from being taken from you.
It is important to pay your debts but you have to understand that you still have to address your bad spending behaviour. If you fail to do this, clearing off your debts may not be the end of your problems. The chances of you repeating the same mistake and putting yourself in debt is not unlikely to happen. You have to address every problem as you pay off your debts to make sure that you will keep your hard earned financial freedom for a long time.
If you need help with your credit woes, NationalDebtRelief.com can offer their services. Just give us a call and we will gladly help you solve and reduce your debts.