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The short answer
Using home equity can lower some borrowing costs, but it turns unsecured card debt into debt secured by your home; compare that risk before choosing a HELOC or cash-out refinance.
What changes the answer
A HELOC may have a variable rate and a payment increase after its draw period. A cash-out refinance replaces the first mortgage, potentially changing the rate on a much larger balance than the cards being repaid.
Settlement carries different risks, including credit damage, lawsuits, fees and possible tax. Compare written costs with direct hardship and counseling as well as either borrowing or settling.
Sources: CFPB: How HELOCs work; CFPB: Trouble making mortgage payments; FTC: Getting out of debt; IRS: Canceled debt and tax
Compare the practical choices
| Question | Settlement | Alternative |
|---|---|---|
| Debt structure | Negotiates existing unsecured claims | Creates or increases home-secured borrowing |
| Cost to compare | Payments, service fees and possible tax | Interest, closing costs and term |
| Failure risk | Collection, litigation and unresolved accounts | Foreclosure risk if secured payments fail |
Sources: CFPB: How HELOCs work; CFPB: Trouble making mortgage payments; FTC: Getting out of debt; IRS: Canceled debt and tax
A practical next step
- Calculate total mortgage and HELOC payments under higher-rate scenarios.
- Include closing costs and the cost of replacing the existing mortgage.
- Check whether card balances are likely to grow again after consolidation.
Sources: CFPB: How HELOCs work; CFPB: Trouble making mortgage payments; FTC: Getting out of debt; IRS: Canceled debt and tax
Before you agree or pay
An equity estimate is not lending approval. Do not pledge a home for a payment you cannot sustain or assume interest on debt-consolidation borrowing is automatically tax-deductible.
Sources: CFPB: How HELOCs work; CFPB: Trouble making mortgage payments; FTC: Getting out of debt; IRS: Canceled debt and tax
Your starting checklist
Keep these records privately. You do not need to upload them here.
Checks stay on this page only.
Questions worth asking
- Why does using home equity change the risk?
- Which part of my records changes this answer, and what should I do next?
Common questions
Why does using home equity change the risk?
It can turn unsecured card balances into a loan secured by your home. If payments fail, foreclosure can become a consequence. Compare closing costs, rate changes and term as well as the monthly payment, and do not assume a larger loan solves a persistent budget deficit.
What should I prepare before asking for help?
Bring the records that address this question: Calculate total mortgage and HELOC payments under higher-rate scenarios. Include closing costs and the cost of replacing the existing mortgage.
Does using this guide change a payment or legal deadline?
No. Reading a guide or completing Find My Options does not file an appeal, answer court papers, stop collection, or create an agreement. Use the actual notice and the responsible court or agency to verify deadlines.
Sources & further reading
- CFPB: How HELOCs work
- CFPB: Trouble making mortgage payments
- FTC: Getting out of debt
- IRS: Canceled debt and tax
Sources checked October 19, 2026. Rules and programs can change. This article uses AI-assisted research and has not received attorney or other professional signoff. Read our editorial standards.
Keep exploring
Educational guidance for U.S. debt situations. This page does not decide legal rights, eligibility, fees or suitability. If you have a court, property or service deadline, seek appropriate help promptly; reading this page does not extend it.