I am struggling with high interest credit card debt. Should I pay it off with a low interest rate home equity line of credit. That is a great question, and for the most part it makes a heck of a lot of sense. Low interest rate and tax deductible interest payments on a line of credit versus high interest credit card payments. All you have to do is tap into the equity you have in your home. That is if you are one of the lucky one's whose home mortgage is not upside down. What do I mean by this, "upside down"? Well that is if you owe more on your home mortgage than what your home is worth.
If you do have equity in your home, you could obtain a line of credit on that equity to pay off your debt. But is this a wise choice. In my opinion, NO.
Credit card debt is not secured. This means there is not anything backing the debt. The credit card companies have really no way of collecting the money owed other than sending a collection company to try and make payment arrangements with you. If that is not possible after months of calling and sending correspondence, then they usually end up declaring the debt not collectible and writing it off their books. This is not to say that another collection company may not buy it for pennies on the dollar and still try to collect from you. They may take you to court and a judge may order you to pay or place a judgement against you, but that is it. They do not have an enforeceable way to collect.
On the other hand, an equity line of credit is secured debt against your home. This means that they can force you to pay by either foreclosing on your home or forcing you to sell your home in order to satisfy the debt. The latter will only happen if you have equity in your home.
Perhaps you may have a 401K retirement plan. You may borrow against this plan and pay off your credit cards but once again. What happens if you do not make the payments. What if you lose your job. Now it will be necessary to repay the 401K or run into tax issues with the IRS.
In many instances it may seem better to borrow from low interest equity lines, 401K or other retirement plans to pay off the high interest credit cards that you may have, but with so many variables at hand, it is my opinion to stick to the more conservative methods that I have outlined before in the blog dated Septemeber 23, 2011 CREDIT CARD REDUCTION TIPS
It takes patience, perserverance, determination and a focused and clear objective of paying off your credit card debt, and it can be done.
Eliminate Debt Fast Without Bankrupcy Or Debt Consolidation
The author of this blog is Marilu Nieto, and experienced Real Estate Broker with financial relief background. The objective is to offer quality information regarding debt relief.
Marilu Nieto,
Home Biz Diva, working with Plug In Profit
Having a hard time making money? BEST MONEY MAKING ONLINE SITE
Debt Relief Information
Consumer Debt Relief
If you do have equity in your home, you could obtain a line of credit on that equity to pay off your debt. But is this a wise choice. In my opinion, NO.
Credit card debt is not secured. This means there is not anything backing the debt. The credit card companies have really no way of collecting the money owed other than sending a collection company to try and make payment arrangements with you. If that is not possible after months of calling and sending correspondence, then they usually end up declaring the debt not collectible and writing it off their books. This is not to say that another collection company may not buy it for pennies on the dollar and still try to collect from you. They may take you to court and a judge may order you to pay or place a judgement against you, but that is it. They do not have an enforeceable way to collect.
On the other hand, an equity line of credit is secured debt against your home. This means that they can force you to pay by either foreclosing on your home or forcing you to sell your home in order to satisfy the debt. The latter will only happen if you have equity in your home.
Perhaps you may have a 401K retirement plan. You may borrow against this plan and pay off your credit cards but once again. What happens if you do not make the payments. What if you lose your job. Now it will be necessary to repay the 401K or run into tax issues with the IRS.
In many instances it may seem better to borrow from low interest equity lines, 401K or other retirement plans to pay off the high interest credit cards that you may have, but with so many variables at hand, it is my opinion to stick to the more conservative methods that I have outlined before in the blog dated Septemeber 23, 2011 CREDIT CARD REDUCTION TIPS
It takes patience, perserverance, determination and a focused and clear objective of paying off your credit card debt, and it can be done.
Eliminate Debt Fast Without Bankrupcy Or Debt Consolidation
The author of this blog is Marilu Nieto, and experienced Real Estate Broker with financial relief background. The objective is to offer quality information regarding debt relief.
Marilu Nieto,
Home Biz Diva, working with Plug In Profit
Having a hard time making money? BEST MONEY MAKING ONLINE SITE
Debt Relief Information
Consumer Debt Relief
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