Where an individual has income and possibly assets which he/she can offer as security (e.g. their home), refinancing may well be an option. Refinancing works best when converting a number of high interest loans (normally credit card debt) into one or more other loans which carry smaller periodic repayments with a lower overall interest charge.
Whilst this approach will avoid the stigma, obligations and restrictions associated with bankruptcy (see bankruptcy), it will not remove the overall burden of debt on the individual. More likely, any refinancing will result in an individual paying their debts off over a longer period.
Where an individual already has a poor credit rating, or refinancing leaves them with an unrealistic repayment schedule, refinancing is unlikely to be the best option.
Care must also be taken when consolidating unsecured debt into a loan which is secured against property.
This leaves your property at risk of repossession if you do not keep up the repayments.