People often rush into a debt consolidation plan when they faced a number of debts due to a home loan, personal loan, bills due to a credit card, medical, etc. The central focus of the debt consolidation plan is it lower interest scheme, single payment source and fit in the monthly budget plan. Instead of managing a number of monthly payments, you will now pay one single payment against all your debts. One thing precisely to be cleared here that debt consolidation loan can only help in lowering or reducing the loan but doesn’t completely finish it off. Some people are actually happy with the debt consolidation loan scheme, and they have been relieved from their debt problem while others find it as a trap, and it often drives people in the debt situation further, and lenders have taken the opportunity as a money extortion situation. Some find it dangerous and opposite of what they think of.

Certainly, when people find themselves in the messy situation of debt, they think of various ways and solution that can drag them out of the mess. No one likes to pay for debt more than their monthly income. Such people have zero savings in their account and if they have any other financial crisis in their life down the road, they will be having nothing but the debt in their hand. It’s very important that they should realize it before it’s late.

Why sometimes are debt consolidation loans not sanctioned?

It’s not necessary that things will go as per your plans. Sometimes they fall out and often show the result opposite to the expectation. This happens under the circumstances like

  • Sometimes it’s the people’s bad luck that won’t help them in driving them out of the debt situation. They may have either bad credit rating, or they don’t have any asset for pounding it as a security to the lenders. Thus, sometimes for some reasonable reasons, people don’t make it and are unable to get a loan.
  • Sometimes time got extended longer than what is anticipated. In the starting of the loan, you have often filled out the section for the time period. If you don’t want to pay more payments then you increase the time period. However, once the payment value lowers, the amount of interest rate goes up. If somehow some financial situation occurs, and things get worse then you might miss the payment, and thus your credit score gets sore. For further information, sign up with
  • The consolidated loan amount is more than anticipation. Many times when you go to a financial institution for the loan amount, and you realize that the amount you have gotten is still not sufficient to pay the entire debt amount, you realize that you have credited extra debt on your head along with the previous debt amount.
  • The percentage of debt payment holds a large amount of monthly budget. Sometimes people don’t realize while they are opting for the loan whether they will be able to pay off with their monthly payment. They might need the savings to support it.

Once you find it that debt consolidation plan has not settled your debt situation completely, then you have to think of some other plan and need to figure out other options.

Figuring out other options for debt

If you have realized that even after taking up the consolidation loan, you are still in the debt situation and plus now you are paying more than before, you have to start wondering what else you can try that can help you get out of the situation. You need to think of a very smart strategic plan where your debt problem should be minimized, and you start paying off the debt payments within your monthly payment. You have to start working on the budget. You need to figure out the expenditure and saving scales. If required then you have to cut some slacks so that you could avoid some unwanted expenses. From your debt payment to personal expense, you have to try fitting them within your monthly income. You have to choose the right solution before reaching an end.

Another solution that you might think of is calling yourself bankrupt and paying off all your debt through it. If a person is unable to pay his entire debt amount, then through this legal procedure they can call themselves bankrupt and then the bank takes the hold off their assets and seize all their bank accounts and properties. They call for the auction and the one who bids high, the property is sold to him. That is how the bank recovers its losses. But the bankruptcy adds the very negative rating on the person’s credit score and maybe for the rest of life he might not be eligible for applying for any credit card or for a loan.

Another option people might consider is a consumer proposal. In this case, if you are unable to pay the complete debt amount then through mutual settlement, you can pay a settled amount to the creditor. The mutual settlement is done where creditor, for recovering as much possible losses, asks for a certain portion. It’s not sufficient but it’s better than when they have nothing. So, now people agreed to pay a certain portion of the total debt amount and settle its debt.

Both of the options provide legal help to the people with loads of debts and security from the creditors. Due to any financial crisis if people start missing out on the payment for debt consolidation loan, then they should go for other option before it’s late.


People often don’t think before spending tons without giving the thought about their payment and other necessary expenses. They often go for credit cards and insanely spend the money. When they see bills, and they don’t have enough to spend, they found themselves trapped in debt and no other way to pay it. The credit card company charges sky-high interest. So, in the first place, avoid debt situation once and for all.