FAQ: Isn't Borrowing or Refinancing Better?

FAQ: Isn't Borrowing or Refinancing Better Than Bankruptcy?

NC Bankruptcy Lawyer in Charlotte North Carolina for Chapter 7 / Chapter 13

Isn't Borrowing or Refinancing Better Than Bankruptcy?

In my opinion, the saddest situation I see is people unsuccessfully trying to solve financial problems by getting deeper in debt, borrowing from family members and not being able to repay them, or using their home equity and/or retirement accounts to try to get out of debt. I never recommend borrowing from retirement since it is supposed to be there for you in your senior years, not to supplement your income now. 

Your home and retirement might be protected from your creditors if they sue you, so if you borrow against them you might be giving up something that you do not have to give up. You might lose your home by getting a mortgage(s) that you can not repay and is more than you can afford to pay back.  

If you borrow from retirement and can't pay it back or you leave your job, you might also open yourself up to bad tax consequences if you can't pay back your retirement loan in full.  Payment in full may be required upon termination from your job - whether you are laid off or you decide to change jobs.  You should consult an accountant about this before borrowing from retirement, and read all the terms carefully.

Remember that you can't borrow your way out of debt. Don't dig the hole deeper if there is a way to get out. Before you try to borrow more money, find out if bankruptcy can help control your debt, either through Chapter 13 repayment/reorganization or through a Chapter 7 straight bankruptcy.

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1701 Scott Avenue Charlotte North Carolina 28203
phone: 704 / 377-0776
fax: 704 / 377-0775

DISCLAIMER: This message is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. Personal opinions may also be expressed. No attorney-client relationship is created by this message. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.

The Law Office of Susanne M. Robicsek is
a Federally Designated Debt Relief Agency
under the Bankruptcy Code.
I file bankruptcy cases for people in financial need,
and have been doing so since 1989.

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