A recent study conducted by Experian anticipates about $265 billion in home equity lines of credit (HELOCs) will begin entering a repayment period, affecting millions of consumers. HELOC originations, which continued to increase from 2005 until the start of the housing crisis, are generally divided into two periods. For the first ten years, a HELOC remains in the draw period, which allows consumers to use the line of credit while making minimum, interest-only payments. After ten years, many HELOCs enter the repayment period. This may cause a hike in monthly payments, sometimes as much as triple or quadruple the monthly payment amount during the initial draw period. Debt-relief consultants anticipate defaults to skyrocket as these HELOCs enter the repayment period.
Consumers who took out a HELOC between 2005-2008 can minimize the shock of entering the repayment period by beginning to plan for the increase in monthly payments now. Some consumers may have the option to refinance, while others may seek strategies such as loan modification programs, bankruptcy, loan settlement, or asset protection planning. The earlier consumers get a handle on their situation and begin exploring options, the better. Attorneys at Jackson Law Group can assist you in a variety of strategies. Contact a local Florida attorney to begin reviewing strategies for addressing your HELOC.