Cash Out Refinance or Home Equity Loan

Pros: Dramatically lower your monthly payments, interest payments on your new balance may be tax deductable, maintains or improves your credit rating by lowering the balance on your unsecured debt. You should pay a much lower interest rate on the unsecured debt once you roll it into a home loan.

Cons: You will need good to excellent credit to qualify for the loan. In light of the Subprime Meltdown, lenders are typically only offering loans up to 90% of your home's value. You need to have enough equity to pay off the unsecured debts. There are fees involved in originating the new home loan. The interest rate you pay on the loan will be lower than those charged by credit card companies; however, you will be paying the loan off over a longer period of time so your total interest payments will be higher.

Debt Settlement or Debt Relief

Pros: Debt settlement companies negotiate with your creditors to lower your unsecured debt and work out a payment plan you can afford. For a fee they will handle all negotiations and set you up with a monthly payment plan that should get you free of unsecured debt within 24 - 36 months. You may also lower your overall debt payments by up to 60% depending on what you owe and the terms of your workout plan. Debt settlement can be a good alternative to bankruptcy; you should end up paying lower fees and you won't have to go before a judge.

Cons: Debt settlement will have a negative impact on your credit history. If you already have bad credit this may not be much of an issue, or if you have good credit and are falling behind on your payments then your credit is deteriorating anyway.

Personal Loan

Pros: You will pay lower fees and do less paperwork when obtaining a personal loan versus a mortgage loan. Approval is also quicker; most lenders are able to give you an approval within a couple of days if you qualify. You may lower your monthly payments depending on the term of the loan. Personal loans are unsecured so you will not be taking on additional risk that you would take on if you pay off your debts with a home loan. Homeownership is not required for a personal loan. If you have less than $10,000 in unsecured debt then a personal loan may be the right way to go.

Cons: Personal Loans often have interest rates that are as high as a credit card depending on your credit. A personal loan may have a negative impact on your credit history. The credit bureaus view these loans as a last ditch effort to restructure your debt and may reduce your credit score because of this. You will lose the option of making a minimum monthly payment that credit cards give you.