I Want to Take Cash Out of My House to Pay My Debt. – Bruce

“Dear Steve,

I live in Northern California and have approximately 90K in credit card debt and need help badly as we’re having trouble making ends meet! If possible I don’t want to file BK
I make approximately 125k a year and my wife has been unable to work the past 4 years due to medical issues.

We currently own a Townhouse and owe about 550K on it and we have about 200K of equity.

Can we somehow use our equity to pay off the debt?

Is there any other type of help available and if so what?

Thank you,


Couple Buying House

Dear Bruce,

Sure, you can talk to a local mortgage broker and see if you would qualify for a cash out refinance to pay off your debt. Your chances of refinancing are going to be dependent on if you can qualify on just your income for the new expanded mortgage.

If I was to guess, I would imagine your growing credit card debt is due to making ends meet with the loss of income and/or medical issues.

If I’m right then refinancing may not be the smartest move for you. By refinancing you will be transferring unsecured debt to secured debt against the home thus significantly increasing your chances of losing the home in the future if income dips at all.

Instead you might be better served by either selling the house, paying off the debt, and living a new life inside of your income, or talking to a local bankruptcy attorney and looking at a chapter 13 bankruptcy to deal with the debt without increasing your mortgage.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Selling the home may help you to find a new way to live a more enjoyable stress free life that would certainly help your wife.

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I know you said you don’t want to file for bankruptcy but avoiding bankruptcy for the sake of avoiding bankruptcy may neither be the best nor most logical approach to take.

Please post your responses and follow-up messages to me on this in the comments section below.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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