Q: Is it better to get a home equity loan to pay off medical bills than file bankruptcy?

A: "Better" is subjective, and only you can make that decision. One thing you may want to consider, though, is that medical bills are unsecured debt. A home equity loan, on the other hand, is secured by your home. Once unsecured debt like medical bills is converted to secured debt like a home equity loan, options are far more limited. For example, in most cases medical bills can be discharged in bankruptcy. However, a debtor who takes out a home equity loan in an attempt to pay off unsecured debt and then finds himself still struggling won't have the same options available. In a worst case scenario, this could end in foreclosure.

Before you make any decisions, make sure that you've thoroughly researched your options. A local bankruptcy lawyer can help you make this assessment, and many offer free consultations, so you have nothing to lose by gathering information.

*Kevin Chern is an Illinois licensed attorney who has practiced in federal consumer bankruptcy law and consumer protection law for the last 21 years. He is the Managing Partner of UpRight Law. Kevin's law partners are licensed in all 50 states and work in conjunction with Mr. Chern to provide bankruptcy and consumer legal services in all 50 states. Mr. Chern's answers to the questions are intended for informational purposes only and are not intended to be legal advice. Use of the answers does not establish any attorney-client relationship. For legal advice, you should consult with an attorney licensed to practice law in your state and with appropriate expertise.

A: I can't tell you which approach is "better" for you, but here's something worth considering: medical bills are generally unsecured, whereas a home equity loan is secured by your house. When you take out a home equity loan to pay unsecured debt, you transform that debt to secured debt that may put your home at risk if you have trouble keeping up the payments.

In addition, once you've converted that debt to secured debt ,your options will be more limited, since medical bills can typically be discharged in bankruptcy but secured debt generally cannot.

*Kevin Chern is an Illinois licensed attorney who has practiced in federal consumer bankruptcy law and consumer protection law for the last 21 years. He is the Managing Partner of UpRight Law. Kevin's law partners are licensed in all 50 states and work in conjunction with Mr. Chern to provide bankruptcy and consumer legal services in all 50 states. Mr. Chern's answers to the questions are intended for informational purposes only and are not intended to be legal advice. Use of the answers does not establish any attorney-client relationship. For legal advice, you should consult with an attorney licensed to practice law in your state and with appropriate expertise.