What Is Debt Restructuring?

By Sheryl Verdugo

Debt restructuring means reorganizing your current debts to make them more manageable. It’s not about running from your obligations—it’s about strategically realigning them so you can breathe easier and build momentum toward your goals.

For homeowners, this often involves using the equity in your home to consolidate high-interest debts like credit cards, personal loans, or medical bills.

🏡 Three Powerful Tools for Homeowners

💸 1. Cash-Out Refinance

Replace your existing mortgage with a new, larger one—and receive the difference in cash. That cash can be used to pay off other debts, often at a much lower interest rate.

Why it works:

• One monthly payment

• Lower interest than credit cards

• Potential to improve your credit score by reducing utilization

Example:
If your home is worth $400,000 and you owe $250,000, you might refinance for $300,000 and use the $50,000 to pay off high-interest debt.

🏠 2. Home Equity Loan

This is a second mortgage that gives you a lump sum based on your home’s equity. It comes with a fixed interest rate and predictable monthly payments.

Best for:

• One-time expenses like medical bills or renovations

• Clients who prefer stability and structure

🔁 3. HELOC (Home Equity Line of Credit)

A revolving credit line that works like a credit card, but with much lower interest rates. You borrow what you need, when you need it.

Ideal for:

• Ongoing or unpredictable expenses

• Clients who want flexibility and control

💬 Real Talk: Is This Right for You?

If you’re carrying high-interest debt and own a home with equity, these options could be life-changing. But they’re not one-size-fits-all. You’ll want to consider:

• Your credit score and income

• Your long-term financial goals

• Whether you’re ready to use your home as collateral

That’s where I come in. I’ll walk you through your options, explain the risks and rewards, and help you choose the path that aligns with your future—not just your present.

✨ Final Thoughts

Debt doesn’t define you. It’s just a chapter—and you get to decide how the next one reads. Whether you’re looking to simplify your finances, reduce stress, or finally start saving again, restructuring your debt through your mortgage could be the reset you’ve been waiting for.

Ready to explore your options? Let’s build your personalized roadmap to financial freedom—together.