When Denise Lopez bought two new tables, a floor lamp and a chair recently, her intent was to finance it with her home-equity line of credit. But it wasn't long before she discovered that wasn't an option. Her line of credit had been frozen.

Associated Press

The purchases for her West Palm Beach, Fla., condo were made on her American Express credit card, and she then wrote a check against her line of credit to cover them.

Not only was she declined, but American Express charged her a fee for a check that bounced, she says. She had a zero balance on the home-equity line of credit when the transfer was attempted; she didn't need to use the line, but said she chose to so she could keep it active.

Ms. Lopez's situation isn't unique. As lenders recoil in an environment of falling home prices and mortgage defaults, many have been reeling in lines of credit or freezing them outright. Lenders say they notify their borrowers when these changes are made, often by mail.

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Ms. Lopez didn't recall seeing a notice until it was too late; her lender, HSBC Holdings PLC, says that a letter was sent. In the event that clients don't find out in time, they can be reimbursed for a bounced-check fee if they provide proof of the charge, says Francine Minadeo, manager of public affairs for the lender.

Lenders say they are reducing existing home-equity lines of credit in markets that have been experiencing significant declines in property values.

Banks including Bank of America Corp. and Washington Mutual Inc. say there is a process in place for customers to appeal these decisions. Washington Mutual spokeswoman Sara Gaugl said clients who have had lines decreased often still have access to available credit.

"If the homeowner feels their situation is different, we will listen to them, particularly if they have an independent appraisal that shows their home has been spared from neighboring drops in home value," Bank of America spokesman David Bradley said.

But, as Ms. Lopez can attest, an appeal doesn't always bear fruit. Her lender refused to budge, she said.

It is easy to see how this scaling back can make a homeowner -- especially one with her debt under control -- feel blindsided when the available credit comes up nil, said Greg McBride, senior financial analyst for Bankrate.com.

In fact, at times it seems that "the banks are freezing the HELOCs first, and evaluating case-by-case later," said Julian D. Hebron, loan consultant and vice president of RPM Mortgage in San Francisco.

One client of his recently had a line frozen, even though he earns a hefty paycheck, has substantial equity in his home and has "perfect" credit.

A reduced credit line can be a challenging situation for those in the middle of a home-improvement project or those who counted on the funds for college tuition.

For others, having a line of credit frozen may be "a blessing in disguise," said Gary Smith, a professor at Pomona College in Claremont, Calif., and co-author of the book "Houseonomics: Why Owning a Home is Still a Great Investment."

"A home is not supposed to be an ATM," he said, adding that using that line of credit for a new plasma TV or an extra car isn't wise in the long run. "You don't really have to have so many cars and vacations and the biggest TV on the block."

If your home-equity line of credit has been frozen, and you need access to the funds, borrowers can follow these steps:

1. Take the lead and call your lender. Ask why the available credit has been reduced, and explain why you think it shouldn't have been, Mr. Hebron said. It's helpful to know your loan-to-value ratio, your credit score and your debt-to-income ratio to discuss your individual situation, he added.

2. Be prepared to have your home reappraised. If you argue that the value of the home hasn't dropped as much as others in the area, be prepared to spend a few hundred dollars on having your home appraised, Mr. McBride said. You'll need that for verification that your situation is different from your neighbors'.

3. Take your business elsewhere. If the current lender isn't budging, look for another, Mr. Hebron said. There are still lenders out there for those with good credit and equity built up in their homes, Mr. McBride said.

4. Be prepared to shop around. If you do change lenders, be prepared for a longer process. Getting a line of credit these days is almost more challenging than getting a new first mortgage, said Ellen Bitton, chief executive of New York-based Park Ave Mortgage Group. That's logical, Mr. McBride said: If a home is foreclosed on, the second lien often becomes a complete loss for a lender.

5. Start saving. If the reason you were holding a home-equity line of credit is to have it for a rainy day, start creating an emergency fund instead, Mr. McBride said. Too many people have been "dining at the home-equity buffet for too long," he said. For some, a frozen credit line may be a wake-up call to start living within their means.

Write to Amy Hoak at amy.hoak@dowjones.com