Step 2: Use Your BLOC to Payoff Debt

payoff debt

First Step: Payoff Debt

Once you have found and are ready to close on your home equity line of credit account, have your lender (or you can do it yourself) payoff your existing outstanding debts.

The income used to pay the monthly debt payments will now become discretionary income for the BLOC program.


  • all credit card debt
  • all auto loan debt
  • all existing home equity loan debt
  • all personal loan debt

    note: after you pay off existing debt, you need to have a remaining credit line of $20,000 or more for the MMA program to work.

    Make sure you open a sufficient credit line that pays off your debts and leaves open a $20,000 credit line balance for use:

    calculate how much your line should be based on your LTV position

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payoff debt

Do NOT Payoff

mortgage loan debt:
we will use the BLOC to pay down your mortgage loan balance over time - this will be demonstrated later on

student loan debt:
if you have federal student loan debt that has not been previously consolidated, you should consider consolidating that debt under the federal student loan program. It offers attractive consolidation features

Keep Yourself Out of Debt

Now that you have consolidated your debt payments, don't' take the extra income and get yourself back into debt. This defeats the BLOC program.

The money "saved" from paying your monthly debt payments will now be used to budget discretionary income to pay down the home equity line account and your mortgage loan balance.

Keep yourself out of debt so that BLOC program can work successfully.

We have more information about debt management plans at our debt relief module

Credit and Debt Management Center

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