Can your house be used for debt settlement? It depends on the capacity in which you’d like to use it. Debt settlement isn’t the same thing as having a debt judgment levied against you by a court. Debt settlement is voluntary and something that you’d do in order to pay off your debt. If your debts are higher than you can afford and you can’t keep up with the monthly payments, you can initiate a debt settlement with your creditors. You don’t need a lawyer to do it but you may need a thick skin and some bravery in order to contact your creditors and ask that your debts be reduced to allow you to pay them off in a lump sum.

Anyone who’s over his or her head in debt should consider debt settlement as an option and ask, “Can your house be used for debt settlement?” Debt settlement shouldn’t be a first option, however. People opt to settle their debts when they can’t find another way out from beneath the burden. Making more money, spending less and using savings and other assets to pay off the debt should be the first choice. If you can pay the debt in full your credit will be better off once you’re out of debt. If you choose the debt settlement, it does ding on your credit temporarily. Of course, if you’re already falling behind in your payments then your credit is already suffering and it may be better to choose a debt settlement and have that bad mark on your credit that will fade with time rather than continue to pay things late and get deeper in debt. That’s why people opt for debt settlement and it’s a good choice even though it can make your credit worse temporarily.

Can your house be used for debt settlement directly through the creditors? No, it can’t. Your house can’t be used as any kind of equity or collateral when dealing with your creditors. They only want to know how much you will pay them in a lump sum to negotiate the debt. Owning a home can help you when it comes to reducing your debt because you have collateral and the ability to get a home equity loan. Your house and other assets can be used in that manner, or you can sell assets to raise money to pay toward your debt. It’s important to remember that this eliminates the ability to make payments. When you negotiate a debt settlement you make one payment for the entire amount that the creditor has agreed upon to resolve the debt.

Can your house be used for debt settlement if you’re willing to get a loan? Yes. As long as you have enough equity in your home you can get a home equity loan and use that money to pay off your unsecured debt like credit card debt and medical bills. You could also opt to take out a second mortgage to pay off your unsecured debt or even sell your home and purchase one that costs less to use the saved money for your debt settlement.

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Tags: Debt Consolidation, Debt Help, Debt Relief, debt tips, Home Loans, Mortgage, Personal Finance, Real Estate, Reduce Debt