Many residents of Tennessee continue to confront debt management problems with respect to credit cards. One problem is that the interest rate and fees imposed on credit card debt is some of the highest debt that one can take on. Due to the expensive cost of that kind of credit, some people have transferred their credit card balances over to a home equity line of credit, or HELOC. This debt relief remedy can substantially lower the amount of interest that one pays on the borrowed funds.
However, the National Foundation for Credit Counseling cautions consumers that this type of move can present its own serious risks. The problem is that such loans inevitably represent a second mortgage on your home and a default in the payments can lead to collection activities, including ultimately to foreclosure. In addition, after transferring one's debt from a credit card onto a home equity line, the consumer may be tempted to begin running up more credit card debt.
In addition, the sometimes-hefty lines of credit that some lenders will allow on a home equity line is just as tempting to spend against without understanding the potentially harsh consequences. Therefore, for individuals and married couples who have struggled with overwhelming credit card burdens without success, moving to a home equity line of credit may not solve the problem. Although the new payments will save on interest, in some cases the ability to get out from under an overwhelming credit card load should not be placed on the equity existing in one's home.
For those Tennessee residents who have confronted overwhelming credit card debt without significant forward progress, it may be prudent to obtain a consultation with an experienced consumer bankruptcy attorney. This is the most effective way to determine whether debt relief options other than bankruptcy can be feasible based on all of one's particular circumstances. Where problems with a HELOC have resulted in collection activities against the residence itself, the attorney will evaluate all of the factors with the homeowner and recommend the most effective options available.