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There might be various reasons for you to tap into your home equity. While some people borrow against their home equity in order to replace a high-interest credit card debt with low-interest home loan, there are others who use their home equity to fund home improvements. Then there are people who just feel more secure when they have an easily accessible line of credit. So, you might either go for a home equity loan (also abbreviated as HEL) or a home equity line of credit (HELOC).

Choosing between a HEL and a HELOC:

If you are looking to payoff high-interest credit card debt, you would want a lump sum amount right away. A home equity loan would be more suited to you in such a case. The home equity loan rate is much lower than the credit card interest rate (and so is the HELOC rate); but since you are looking for a lump sum amount, a HEL would be more suited.
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If you are struggling with credit card debt, your home could be your savior. A home equity loan can help you pay off the expensive credit card debt. A home equity loan is a loan that is secured against the equity (the extent of ownership) you have in your home. Since the home equity loan interest is much lower than the credit card APRs, it makes a lot of sense to use home equity loans for paying off credit cards.

So, here is a 3-step guide on how to pay off credit card debt using home equity loan:
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An individual having to choose between a bankruptcy and a foreclosure often has to make a choice between the proverbial devil and the deep sea. It will pay off big time if you know the pros and cons of each. The ultimate objective of both is to get out of debt and get set on a path to new financial growth and credit repair. You should be aware of which path will enable you to achieve your objective with as much saving of time and money as possible – because you are going to need both when you set out to rebuild your finances from scratch.

Pros of foreclosure

• If at all this can be considered a pro – a foreclosure stays on your credit report as a negative mark for only seven years. Moreover, you can work to improve your credit score and qualify for a mortgage again in as few as four years.
• You are not bankrupt – the foreclosure may leave you with some assets and liquidity to start your rebuilding process afresh.
• In certain states like California, if you choose to move away from your home the lender cannot then contact you for further payments.

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The easiest and most straightforward way to avoid bankruptcy is to not be in debt and if at all you take a loan, see that you pay it off in time. Simple as that!! But is it really that simple. Let’s try and understand.

What Is Bankruptcy?

Bankruptcy is basically an extreme step that you take to give yourself a chance to start all over again financially. It means that you move the court and establish via federal court proceedings that you are simply unable to pay off your creditors. Under federal bankruptcy laws you are then protected from the creditors; they cannot contact you to repay the loan.
Individuals file for bankruptcy under Chapter 7, this is also known as a “straight bankruptcy”. A bankruptcy will allow you retain certain property that is exempt from creditor take-over. Liens on real estate will survive. Most assets will be sold to pay the creditors. Also bankruptcy discharges will stay on your credit report for up to 10 years, affecting almost areas of your life including jobs and ability to get a loan at good rates.

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