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.
What about Mortgage Modification?