Cash for collateral!!!?

I simply didn't get your query. Why would a person take a loan if he already had that money? Well if it's a policy, he might take a loan depending on his policy terms.

I would not do it that way. If you take out the loan and do not change your sdneping habits, you will really be stuck. You have to cut up and get rid of the credit cards forever. I am going to use some theoretical numbers here. If you have $ 10,000 in outstanding debt and take out a loan to cover that amount, you have not really accomplished anything but moving the debt from one place to another. The debt is still there. If you do not get rid of your credit cards, you will look and say, Hey, I have nothing on the credit cards, I'm going to buy crap I don't really need. After a while you will have the $ 10,000 loan to pay off and another $ 10,000 in credit card debt. Now your $ 20,000 in debt and the black hole sucking vortex has you firmly in it's grasp. You need to change your sdneping habits. Please read Dave Ramsey's book the Total Money Makeover. My wife and I were in the exact position you are in now and moved everything to a HELOC loan and ran up the cards again. I am telling you this as to warn you not to do what you are thinking. You have to fundamentally change the way you look at and use money. This book will help you do that and give you a solid foundation towards a lifetime of good money decision making and investing for the future. Been There, Done That, It Sucks, Don't go There. Get on and stay on a budget. You will be amazed at where your money goes. Tell it where to go instead of wondering where it went. Pay minimums on everything but the smallest debt. Put every dime towards the smallest debt and knock it out. Then, take the amount you used to pay on the smallest and roll it up to the next debt. Pay minimums on everything but the smallest and throw every dollar at that one. Keep moving up your list until they are all knocked out. This is called the debt snowball method. Use cash or debit for everything. You have to break the back of this debt thing or you will go through life with an anchor tied around your neck thinking debt is normal. Unfortunately, it is normal for most people and it sucks. Get rid of debt and save for your future. Read the Book, it will change your life for the better.