When individuals are looking into alternatives to filing bankruptcy, many times they look at taking out home equity line of credit on their house to pay off the debt. Most consumers would think it ludicrous to pay for a $65 trench coat over a period of 30 years at an annual percentage rate (APR) of 24 percent or higher! But that’s exactly what borrower/debtors wind up doing when they use long-term debt to pay for short-term charge card purchases. Eliminating revolving debt through disciplined and consistent payments over several years just makes a lot more sense. Distressed homeowners may fare far better by borrowing money from family or friends for credit card debt elimination and saving the home equity for financing college tuition or retirement.
