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

Great interest rates make a home equity loan appear like a good strategy for dealing with a lot of personal debt. However, you should first comprehend what a home equity loan is and if it is really right for you. You may find out that debt settlement is a better 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. Remember, if you can't pay off the home equity loan, you may forefeit your house. This is something most people do not know about, so when considering taking out a home equity loan you want to be sure that you are able to meet the required payments.

What you are doing is taking an unsecured debt - your credit cards - which can be dismissed in bankruptcy court and turning it into a secured asset that can be taken away from you. Is this method of eliminating credit card debt really an equal exchange - giving up your house if you fail to make your credit card payments?

Otherwise, if you are interested in taking out a home equity loan, but have little idea what equity is or means or if you have any. Equity is simply how much you have paid back on your house loan. If you take the amount left on the loan away from the current value of the home then you will find out your equity, and then you will know if you will be approved for a home equity loan. The current worth of your home which is $200,000 and the balnce left to pay on your mortgage which is $80,000 can be taken as an example Right now your equity is $120,000.

What about debt settlement? Debt settlement is where you either hire a debt settlement company or you do it yourself, and you negotiate down your credit card debts with your credit card companies. 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.

Some money is better than no money, so most places are willing to make a settlement if it benefits them. And with debt settlement, you do not risk losing your home if you do not make the payments as with a home equity loan which makes it a more attractive option to eliminate your credit card debt.

There are a few things you still need to understand about debt settlement, such as how much does debt settlement cost and what is the best way to eliminate credit card debt. Learn all this at How To Eliminate Credit Card Debt.