Debt Consolidation ? Discipline is Required if Consolidating with Home Equity

Debt consolidation is a popular topic these days. The average American carries nearly $10,000 in credit card debt and credit card debt of $100,000 is not all that unusual. New legislation that takes effect in October 2005 is going to make it harder for those with problem debt to file for bankruptcy, so many people are trying to find ways to consolidate their debt instead. One of the most popular ways to do that is through a home equity loan, but borrowers need to be careful, as there are potential problems with borrowing against your home to pay other debts.

The concept of debt consolidation is simple. You transfer the debt from one or more high interest loans to a single, larger loan at a lower interest rate. The most popular way of accomplishing this is to transfer debt from a credit card, which often carries an interest rate of 20% or more, to a home equity loan with an interest rate of less than 10%. By doing so, you can reduce your debt payments by as much as several hundred dollars a month. Those taking out home equity loans for such purposes should be careful and be aware of the following potential problems.

Consolidating through a home equity loan trades unsecured debt for secured debt. Credit card debt is unsecured by collateral. Should you fail to pay, the credit card companies can send a collection agency after you to collect their money, but that's about all they can do. If you transfer the debt to a home equity loan, the debt becomes secured by your home. If you fail to pay that debt, you could have your home repossessed. For those who have problems paying their bills, this could represent a substantial risk.

Consolidating debt requires discipline. Some spenders cease spending only when their credit cards are at their limit. Transferring debt to a home equity loan clears the credit card balance and reduces it to zero. The debt still exists; the bill just comes from a different company. Once the bill is back to zero, compulsive spenders may not be able to resist the urge to spend more. This will leave them with both a home equity debt and additional credit card debt, making a bad situation even worse.

Debt consolidation through home equity loans is a great way to reduce debt. Debtors just need to be aware that they are risking their home when they do so and that additional spending discipline is required. Many debtors may benefit from simply canceling their credit card accounts once the debt is transferred to the home equity loan. Reducing debt is always a good idea. Debtors just need to make sure that they don't run up more debt or lose their home in trying to do so.

�Copyright 2005 by Retro Marketing.

Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation information and HomeEquityHelp.net, a site devoted to information on home equity loans.

---

The Benefits of Debt Consolidation

It is quiet easy to get into financial difficulty having... Read More

Debt Consolidation ? Options for Reducing Your Debt

Studies show that Americans are now saving less than ever... Read More

7 Ways to Consolidate Your Debt

If you are in debt, you have several options available... Read More

What is Debt Consolidation?

Debt consolidation may be the answer for anyone drowning in... Read More

How To Get Rid Of Debt Problems Step 4 -- How To Get Interest On Your Debts Frozen

The first thing to understand is that there is categorically... Read More

Private Student Loans ? Dispelling The Myths

Private Student Loans ? dispelling the mythsIf savings, grants, scholarships,... Read More

Debt Consolidation Loans: Thousands Now Out Of Debt, Who Never Thought They Would Be!

A Debt consolidation loan: Is a personal loan you use... Read More

Debt Consolidation: Friend or Foe?

Debt consolidation has become big business in this country over... Read More

Getting Your Best Deal on a Consolidation Loan

If you find yourself having to make too many payments... Read More

Debt Consolidation for Homeowners: Saving Grace for Inept Borrowers

You cannot understand the importance of being a homeowner until... Read More

Credit Card Purgatory - A 7 Step Comprehensive Plan to Get and Stay out of Credit Card Hell

Does this Sound like You? There are 100 shopping Days... Read More

Debt Consolidation when You Find Yourself Overwhelmed with Bills, Bills, and More Bills

Many of us find ourselves overwhelmed with bills, bills, bills.... Read More

Debt Consolidation -- Choose Your Credit Counselor Carefully

Recently passed by Congress, the Bankruptcy Abuse Prevention and Consumer... Read More

Debt Consolidation Company and Companies

Debt consolidation companies have dotted the debt solution landscape as... Read More

Debt Consolidation Makes Sense Only with Low Interest Rates

Credit that cannot be managed or is not being repaid... Read More

Bad Credit Debt Consolidation Loans

Are you looking to consolidate credit card or other debt?... Read More

Planning To Become Debt Free With A Consolidation Loan

If you have multiple debts, and are struggling to meet... Read More

Negotiate Your Way Out Of Debt

Eliminating your debt is a daunting task. What can you... Read More

Debt Consolidation Refinance Loans - A Great Way To Lower Your Bills

For millions of homeowners, refinancing is the perfect way to... Read More

Debt Consolidation with Free Government Grants? One Scam to Avoid

Have you ever seen a commercial or an ad promising... Read More

Debt Consolidation - Is It Really The Best Option For You?

It is a very common question that people pose to... Read More

Debt Consolidation Benefits

If you've ever been in a situation where you needed... Read More

Choosing the Right Credit Counseling Agency for You ? Some Tips

Credit counseling companies come in all shapes and sizes. Whether... Read More

Debt Management - How a Debt Consolidator Can Reduce Your Debt

A Debt consolidation program starts with evaluating your financial situation.... Read More

Pay Off Debt Now: 5 Steps To Getting Your Finances in Order

In our world of dizzying change, nothing is more true... Read More

10 Pointers on College Loan Consolidation

Should I consolidate my college loans or not?1. Still in... Read More

Credit Counseling ? Get in Line Now to Avoid the Upcoming Rush

Credit counseling is a valuable service for consumers who have... Read More

Avoid Bankruptcy

The first but definitely not the easiest thought that comes... Read More

Free Yourself Of Debt and Worry with Debt Consolidation

Debt consolidation programs can help you lift the burden of... Read More

Benefits of a Debt Consolidation Loan

There are many benefits in choosing a Debt Consolidation Loan,... Read More

Debt a Glossary of Terms

Bankruptcy - Having been legally declared financially insolvent. There are... Read More

Burdened with Debt?

Too many debts? Having trouble paying your bills? Are you... Read More

Getting a Better Consolidation Loan Secured

If you're looking for the best way to reduce the... Read More