Second Mortgage On My House To Pay Off My Credit Cards?

Taking a second mortgage out on your house to pay off credit card debt is a bad idea in most cases. 

In the event you need to file bankruptcy, credit card debt can be wiped out if necessary.  Even in a Chapter 13 plan where you are paying back all of your debt, the interest rate paid on credit card debt is zero.  In contrast, the most common way to get rid of your second mortgage in a Chapter 13 or a Chapter 7 is to surrender the house to your creditor.  To keep the house, all payments must be made on the second mortgage. 

Why would you ever want to exchange a type of debt that can be wiped out or paid back at zero percent interest for a new type of debt that must be paid back with interest and could result in the loss of your house if you ever get into a position where you can’t make the payment?

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