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Illinois debt relief: It may be difficult to refinance some loans

There are many Illinois residents that are still struggling with their finances. In an attempt to achieve some debt relief, some may be considering refinancing certain loans in order to lower their payments and save some money. However, wanting to refinance and being able to refinance may be two different things.

The loans that most people tend to want to refinance are used car loans, student loans, and home loans. Used car loans can be difficult to refinance if the owner's credit is weak. When looking to refinance a used car, banks often look at credit, income and the value of the car involved. Those with weak credit may not be able to refinance. It may be possible to extend the loan term or roll the remaining loan into a new car loan, but neither of these options may provide the relief the car owner needs.

Student loan debt has increased significantly during the recession, and eventually, students are going to have to pay them back. It is possible to consolidate student loans, but sometimes the resulting payments are too high. Student loan companies do have repayment options that may provide some relief.

Refinancing a home can be a complicated and time consuming experience; but, qualifying for a loan modification may be the real challenge. With the Illinois housing market being what it is, many homeowners owe more on their homes than they are currently worth. This may cause a homeowner to be stuck with their current mortgage terms.

For people that are unable to refinance and are suffering under the weight of their debt, bankruptcy may provide the debt relief being sought. Filing bankruptcy may give the filer time to step back and consider their financial situation in a way they would not otherwise be able. Even though most student loans are not dischargeable, having other debts discharged may provide the financial cushion needed to repay those loans. In addition, bankruptcy would provide the filer with the possibility of keeping a house or car or being able to walk away.

Source: MSN Money, "3 loans that are tough to refinance," Jan. 14, 2013

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