Home equity loans and home equity lines of credit (HELOC) are good options for many people that have equity in their home and want to leverage that equity to cover additional expenses.  The  primary advantage of these types of loans is that they typically have a much lower interest rate than other types of loans, or lines of credit, because they use the home to secure the debt.

Unfortunately, if the borrower defaults on the home equity loan or line of credit payment they could put their home at risk for foreclosure.

Sometimes unanticipated things happen like a job loss or health related expenses and sometimes it’s just a case of overspending and finding yourself buried in debt.  If you find yourself struggling to make payments on your home equity loan or HELOC, or you are already in foreclosure for your first or second mortgage, it’s time to see what options you have to get second mortgage debt relief.

Options for Second Mortgage Debt Relief

Refinance Your Home Equity Loan.  If you can make smaller payments and you have cash you can use for closing costs, you may want to consider refinancing your home equity loan.  It may also be possible to combine your home equity loan with your existing home loan to consolidate into one smaller payment.

Eliminate or Reduce Recurring Expenses.  Review your monthly recurring expenses and see what you can eliminate or reduce.  Your goal should be to decrease your recurring expenses enough to be able to make your second mortgage payments.

Eliminate Credit Card Debt.  Many individuals with Home Equity Loans also have credit card debt.  If you have a lot of credit card debt you may want to consider credit card settlement to greatly reduce your debt and free up money to allocate to your home equity loan or HELOC payments.

Second Mortgage Settlement.    If your primary mortgage is considered “under water” or your primary mortgage is at risk of foreclosure or going through foreclosure, settling your second mortgage debt could be a very good option.  Settlement involves negotiating with your second mortgage creditor to accept less than the principal balance still owed on your home equity loan or HELOC.

File For Bankruptcy1 In extreme cases it may make sense to file for Chapter 13 Bankruptcy.  A second mortgage is a second lien on the property and therefore can be converted to an unsecured debt during the bankruptcy process and eliminated at the end of the process.  To understand the impact to your credit score and financial situation you should consult with a bankruptcy attorney.

Don’t Walk Away From Your Second Mortgage

If your property is under foreclosure you may think it’s okay to just walk away from your second mortgage.  However, that’s usually not a good idea.  Home Equity Loans and HELOCs may be considered “recourse loans” depending on the state you live in.  If they are “recourse loans” then the lenders have the right to pursue legal action to force payment of the second mortgage. It would be much better if you considered debt settlement of your second mortgage to significantly reduce what you have to pay and to ensure that the debt is resolved.

If you are in the situation where your property is already under foreclosure and you cannot make your payments on the second mortgage, you should talk with a debt settlement company like PCS Debt Relief to see if they can assist you with negotiating a settlement on your second mortgage.

1 PCS Debt Relief is not a law firm, and does not provide legal counseling. If PCS believes bankruptcy may be the best solution for you after analyzing your situation, your debt analyst will refer you to an attorney to receive legal counseling.
PCS Debt Relief

PCS Debt Relief

Sr. Debt Analyst at PCS Debt Relief
At PCS, our programs are tailored to the client’s specific financial needs. What sets us apart from our competitors is that clients see relief, before any payment is received. Our NO UP-FRONT FEE policy ensures our client’s a 100% satisfaction guarantee. We also do not charge any monthly fees or any cancellation fees. We want the client to feel comfortable during the whole process that’s why we allow them to be part of it every step of the way.
PCS Debt Relief

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