With many in Louisiana and across the country facing financial hardship because of the recent economic downturn, some homeowners are taking out home equity loans. This option can provide much-needed relief for certain expenses, such as paying monthly bills, but it can result in a long-term cycle of debt for some. It is simply a short-term solution, not a long-term answer to financial struggles.

Studies found that one in four homeowners who borrowed money against the equity in their home and paid it off ended up borrowing again. On average home equity loans amounted to around $25,000, and it took owners around three years to pay them off. These revolving lines of credit come with varying interest rates, but they use an applicant’s home as collateral.

Experts say it’s easy for consumers to get in over their heads with these types of loans. For those who paid it off once, it may not be as easy to do so a second time. It is especially risky for those who live in a home that has depreciated in value. Borrowing in this way can compound existing financial troubles and place a consumer at risk of losing the home.

A Louisiana consumer stuck in a cycle of debt may feel as if he or she has no way out. In reality, there are certain bankruptcy options that can help deal with debt, even allowing an applicant to save his or her house. When facing financial complications and a heavy debt burden, it may be helpful to speak with an experienced attorney regarding the possibility of filing for bankruptcy.