When you are unable to pay your bills, your balances will continue to accumulate, and interest can add more to what you already owe. This can create a situation that you may never be able to escape on your own, and you might find yourself considering various options that could be available to you. One of these options includes bankruptcy, which is a legal process that provides Tennessee applicants the opportunity to deal with certain types of debt and seek a better financial future.
If you are considering bankruptcy, you will benefit from learning more about what options are available to you. It is in your interests to know about all of the options you have and how bankruptcy could impact some of your debt. This might be important if you have a home equity line of credit and you file for bankruptcy protection.
What is a HELOC?
A HELOC is a Home Equity Line of Credit that borrows against the value of your home. During the life of the loan, you can borrow and spend as you wish and use your home as collateral. The amount you can borrow typically depends on a percentage of the equity you have in the home. Depending on the type of HELOC you have, you may have to make repayments over time, or there may be a balloon payment at the end.
During the bankruptcy process
If you file for bankruptcy, this means that you are unable to meet many of your current financial obligations, which may include repayment on your HELOC. Since you used your home as collateral for this loan, stopping payments could place your home at risk. This could happen even after the discharge of outstanding balances during Chapter 7. Throughout the process of bankruptcy, applicants may want to prioritize payments on their line of credit.
The benefits of bankruptcy
There are many reasons why someone may choose to file for bankruptcy protection. One of the main reasons why you are considering this process could include a desire to be rid of debt, make creditors and debt collection efforts stop and seek a better financial future. You will benefit from seeking the guidance of a knowledgeable legal ally who can provide insight regarding the most appropriate and effective options according to the details of your individual situation.