Unsecured Debt into Secured Debt Conversion

Do not turn unsecured debt into secured debt!

If you are one of the few people left in America that own a home and that has equity in it, you have a few options available to you as far as paying off your debt

1. You could take a home equity loan to pay off your debt. This is something we strongly suggest you not do. The reason is simple. You would be taking unsecured debt into secured debt. Then, suppose you lose your job. What happens next? You more than likely would lose your house as now all your debt is secured debt. Never take this option, in our opinion.
2. You could refinance your car to pay down your debt. This is a 50/50 proposition in our opinion. Yes, you could lower your payments to help pay off your debt. On the flip side, your car may run out of life before it is completely paid off. Who wants to be paying on anything they cannot use anymore.
3. Take out a personal loan. This falls into the same category as # 1, unless the loan is unsecured. If the loan is unsecured, then check what the interest rate is that you would be paying. If it is higher than what you are currently paying your creditors, what would be the point?
4. Contact your creditors and negotiate better terms. Often, credit card companies are looking for solid people who are hardly ever late on their monthly payments to their creditors. When they are, the creditors whack you with a fee anyway. However, if you have been with the creditor for say over 5 years, and have a good track record with them by all means call and ask them if they will lower your interest rate. It never hurts to ask!
5. You could refinance your home. Yes, you could and if you have equity in your house, you could take that out to consolidate you debt. Here again, we ask that you err on the side of caution. Cut your credit cards up first before paying off any balances. Otherwise, you have not really dealt with the symptom, which is overspending in the first place.

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