When you are overwhelmed in debt and looking for options for financial relief, some people consider debt consolidation loans. These loans are intended to lump all of your debt into one payment.
Secured Loans
Some debt consolidation loans come in the form of using the equity in your home or other assets. Since it is a secured loan, the interest rates may be lower, and you will have a longer repayment schedule. If you use this loan to pay off higher interest credit cards and loans, it may be a good choice.
Converting Unsecured Debt
Another way of looking at these loans is that by using the equity in your home, you have turned credit cards, medical debt, and other unsecured debt into secured debt. If you default on these payments, you may lose your home. Whereas if you left the debt as unsecured, your home would be safe if you default on the payments.
Caution is Advised
Be careful of getting a consolidation loan using the equity in your home. Analyze the anticipated monthly payment on your short term and long term finances. If you are unsure of your ability to make the payments while looking at your budget, you may want to consider other options that won’t put your home at risk.
Bankruptcy
Bankruptcy can give you financial relief by eliminating your unsecured debt, such as credit cards. If you are behind in your home payments, bankruptcy can help with that too. Contact a Hidalgo County bankruptcy attorney to find out what type of bankruptcy would fit your unique situation and get you financial relief.