Should I refinance my loan or file for bankruptcy?

Carrying around debt of any kind is not easy, but it is fairly normal. Consumers in Maryland may have all types of outstanding debts, including mortgages and credit cards. When dealing with these debts becomes too much, it may be time to consider options like refinancing, debt consolidation or bankruptcy.

The average homeowner has an outstanding mortgage of $203,296. When a homeowner can no longer keep up with his or her monthly mortgage payments, it could be time to consider refinancing the terms. Securing a refinanced mortgage with a lower interest rate could make the monthly payments more reasonable and therefore easier to manage.

Taking out a loan to manage one’s debt might seem counterintuitive, but it works for some people. A consumer may choose to take out a personal loan at a relatively low interest rate, use the funds to pay off multiple higher interest rate debts and then pay back the personal loan with a single, lower monthly payment. This is considered a type of debt consolidation. Some people also find that transferring balances from high interest rate credit cards to cards with low rates is also helpful.

Refinancing and debt consolidation can be helpful in the right circumstances, but for some people it is simply not enough. Bankruptcy can provide a more clear-cut path to financial security by ultimately discharging debt rather than shuffling balances from account to account. Maryland debtors who are struggling with their finances may want to explore whether they qualify for Chapter 7 or Chapter 13 bankruptcy, as there is an income limit to filing for Chapter 7.