Anytime you take out a line of credit, there are severe consequences for not being able to pay back the loan. If you take out a large unsecured personal loan to fund home renovations, if you should default, you risk destroying your credit. A default on a personal loan can adversely affect your credit for up to 7-years or more. Also, if you default on an unsecured personal loan, you may find yourself being sued by the lender. If the judge grants the lender a judgment, they may be able to place a lien on your home or personal property to obtain the amount they are owed. The larger the loan amount, the more likely you may see yourself in court facing a lawsuit.
If you default on a home equity loan or HELOC, then the lender may foreclose your home and sell it to recover as much of the loan balance as they can.