Refinancing just to sell?

Thanks for any suggestions. Here is the relevant info:

-My partner of last 15 yrs and I own a house, but are separating amicably and need to sell despite the less than great market. -Bought in 2020 for 300K/2.875%, currently owe 250K, worth close to 400K. -Mortgage is in partner 1's name only, title is shared because P1 has better credit. -We have 35K in shared revolving debt that's crushing our ability to separate effectively, much less get the house in shape to sell. Some low interest balance transfer cards, but at least half with high interest cards.

Up until today, the plan was to kill the debt first because we can't do anything with like $3K/mo in debt payments (I've already been couch surfing for a year). The only way to do this that isn't just replacing it with another payment is to pull some money from my Pension, borrow the rest from fam, and settle it up after the house sale.

Today someone suggested to refinance the house now, lose our good interest rate and have a slightly higher mortgage for a few months, but then debt would be gone and we'd have cash to play with for fixing up the house and investing in our own next steps in life.

To me, sounds better than pulling from retirement...

Bonus: there's a scenario in which it would be great if partner 2 could buy out partner 1 and take over the house, saving a lot of effort and money, but can't seem to find a way that still takes care of the debt. Wish P2 could just take over the current mortgage, but since it's only in P1's name that seems no good.