Don’t Take Out A Home Equity Loan To Repay Credit Cards

If you are thinking about taking out a home equity loan to repay your credit cards, you should think again. Most people, who borrow more money to pay off debts, end up in more debt than they had when they started out. If you haven’t learned how to manage your money, borrowing extra funds is just going to dig the financial hole you are in deeper and deeper.

The other major disadvantage of borrowing money on your home to pay off credit cards is the fact that should you fall behind with your payments your bank or financial institution can foreclose on your home. It is not usually possible for your credit card company to do this. Credit card debts are unsecured which means that the finance house has to sue you to recover the monies due. A lot of credit card companies prefer not to do this due to the costs involved. Instead they will sell the accounts belonging to people who have defaulted to debt collection companies. These companies pay relatively little cash for these accounts.

Why would they want a load of accounts that nobody is paying? Because they know that they only have to make a few people pay to make a large profit. Once the debt collectors get hold of your credit accounts, your life could become very stressful. It is not unknown for debt collectors to call clients all day long, at work and at home. They can also threaten all sorts of things from telling your boss you owe money that you are not paying back to putting an advert in the newspaper to tell the world. What you need to know is that there are laws in place to prevent this sort of harassment. The problem is that most people who collect debts know that the average member of the public doesn’t know that these laws exist never mind how to use them to protect themselves.

If you find yourself hassled by debt collection agents, find out what protective measures you can take. There are many charities that can help to explain your legal position but it is often a good idea to book a meeting with an attorney and his bankruptcy paralegal. They will assess your financial situation and give you advice on the actions you should take to get your debts under control and the debt collection agents to stop contacting you. You will have to pay for this advice but most people who benefit from it would gladly pay ten times as much just to be rid of the harassment. So rather than run the risk of making a mistake such as taking a home equity loan to repay debt, contact your local bankruptcy attorney today.