Debt settlement or a home equity loan - which way is the best way to eliminate credit card debt?

The idea of getting a home equity loan while interest rates are low to help you pay off your seemingly insurmountable debts may seem like a great idea. However, you should first comprehend what a home equity loan is and if it is really right for you. Debt settlement may prove to be the best option to eliminate credit card debt.

A home equity loan allows a home owner who has built up equity, to borrow against it, whether he has a lot or a little - a lot is better. Basically, in order to get a home equity loan, your home is put up as collateral - that is, the basis - for the loan. Always keep in mind that if you do not pay the home equity loan back, then your home is at stake and may be foreclosed upon. This is sobering news many people are not aware of, so getting a home equity loan requires some thought and the ability to repay the home equity loan as well.

The problem is that you are putting your home in jeopardy, with unsecured credit card debt, which can often be dismissed when backruptcy is filed. It does not seem like the best way to eliminate credit card debt.

If you do not understand what equity is or how you can use it, you should inquire about it and see if a home equity loan may benefit you. Your equity is limited to the amount of your home load that has been repaid. So, you take the home's current value and subtract it from the amount you still owe to pay for that house, which is how much equity you have in your home and what will ultimately be used to approve or deny your home equity loan application. Pretend that you could sell your home for $200,000, and you owe $80,000 on your mortgage. Your current equity is $120,000.

How about debt settlement? You can hire a debt settlement company or  work with your credit card companies yourself to reduce your debt , this is how debt settlement works. If you cannot satisfy the amount of the settlement, you would have to declare bankruptcy and the credit card company would be left holding the bag.

This makes them more willing to agree to a settlement if they can at least recover some of what is owed them. If you are trying to eliminate consumer debt, then a debt settlement option is the better way to go, because you wouldn't be putting our home at risk, if payments cannot be made.

Understanding the cost and the best way to approach debt settlement are also things you need to know before you decide to try this approach.  Learn all this and more at How To Eliminate Credit Card Debt.