Debt Relief Alternatives Home Equity Loans    A home equity loan by definition is borrowing money against equity (value) that you have built up in your home. Typically a consumer can borrow up to 85% of their equity. This is best used when a consumer is looking into remolding or home improvement. In those instances the home retains the value of the money borrowed. If considered for debt relief, this is an option that consumers may look into for repaying their unsecured debts. As with any debt relief option, it has benefits and downsides.  Personal Loans    Most consumers that are seeking debt relief will typically look to this option first. The idea of having a multitude of debts paid in full and immediate relief in the number of outgoing payments each month is a very attractive option. As with all options, a consumer needs to look at their individual situation to determine if this is the best one. In the case of a signature loan, the consumer has the assistance of the banks in making this decision. An unsecured loan to pay off unsecured debt is extremely difficult to obtain. Essentially what the consumer is applying for is an increase of 100% of their current available credit. In most, if not all cases, this is too risky a proposition for lenders.  Balance Transfers    Many banks will offer low or 0% introductory interest rate credit cards. A balance transfer from high interest rate card to a low or 0% interest rate card can make financial sense and save a lot of money in the long run. A consumer needs to be sure to look at the fine print of the credit agreement before using this options for debt relief.. Verify the length of term of the introductory or low rate and any fees that may apply. At the end of the promotional rate interest rates will typically be as high as any other credit card. If there is ever a time that a consumer is late on making a payment, interest rates can be increased to a maximum allowed by the contractual agreement (typically 22-28%). Interest may also be retroactive to the beginning of the promotional rate period. Which means a credit grantor can go back and charge a high interest rate for whatever duration you were paying the promotional rate. Investment Borrowing    Borrowing from an investment to pay off an outstanding debt is an option that a consumer may seek when they consider their assets vs. their liabilities. For example: If a consumer has $20,000 in a 401 (k) plan and they owe $5,000 in credit card debt, they would see their financial worth as $15,000. A consumer may choose to borrow from their 401 (k) to pay off the outstanding debt if the monthly payments are getting to be too much or the balances simply aren't going down.  Bankruptcy    There are actually four (4) different kinds of bankruptcies available under existing law. They are listed in different chapters of the Bankruptcy Code, which is the federal law that controls all bankruptcies in the United States. Those four chapters are Chapter 7, 11, 12 and 13. Each chapter has different aspects that would determine which is appropriate for an individual. A consumer that is considering bankruptcy for debt relief should always consult with an attorney in their area for proper advice on filing any of these proceedings.  Debt Settlement.    Debt settlements are offered by banks in an attempt to reclaim an outstanding debt. Typically the lender will offer to settle with the consumer on a percentage of the amount owed. For example on an outstanding bill of $1000.00 a creditor may offer to clear the debt by accepting $600.00. The Settlement amount generally needs to be paid in either one lump sum payment, or over three equal installments. Though not in all cases an offer of this sort is generally done after the account has been charged off, meaning that the creditor has written off the balance of the debt as un-collectable. Most creditors will charge off an account after five months of nonpayment, although a few may choose to do so sooner. A charge off is an accounting practice by banks in an effort to clear their records of bad debts. Debt settlement can be used for debt relief.   More on Debt Settlement.