In the current economic crisis an increasing number of people are finding that they are having trouble meeting their everyday expenses. When things become difficult it is all too easy to miss payments and rack up even more debt than you had in the first place. The only way that you can sleep well at night an not worry about the economic crisis is to try and find a way of paying off your debt, or at least reducing it down.

Sometimes people find that they are much happier when they find a way to pay off their debt and so they resort to a practice of paying it down, i.e. taking out more debt to cover the debt that you already have. It is not a good idea to take out a secured loan to pay off unsecured debt such as that owed on a credit card.

If you look online for debt advice then you will find that an increasing number of so called experts, recommend that people take out a home equity loan to pay off their debts – this is bad advice that you should not follow. When you take out a loan based on the equity in your home, and then find that you can no longer pay it, then you are at risk of losing your home.

When you have unsecured debt it means that there are no assets for the debtor to claim on if you fail to pay or fail to pay in the time allocated. If you lose your job and cannot keep up the terms of a home equity loan, then you could stand to lose that home because your creditor is entitled to make you sell it to reclaim what you owe – a lot of people have been made homeless this way when they need not have been,

When you are forced to sell your home to pay off creditors then it is highly likely that you will not get the same amount of equity there would have been, had you not been forced to sell. Another thing that so called debt advisors may say you should do is to take out a 401K loan. If you do this you are paying out of your retirement fund which is before tax money and you could then end up having to pay tax on the money that you borrowed.

Don’t pay down loans with either your home equity or 401K loan to pay off unsecured debt as you could get yourself in a whole load more trouble than you had ever realised. There are other ways of paying off unsecured debt such as debt consolidation, renogiation of payments and spending less than you earn. Paying down loans in the ways described above is not a good idea.