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You Need an Unsecured Debt Consolidation - But The Bank Said No...

Now What?

Your credit cards are full, the interest payments are severely limiting your lifestyle and you just can't seem to make a dent in your debt load. You need to consolidate or otherwise make some changes, or it's going to go from bad to worse in short order. So you approach the bank - and they deny your application. It's very frustrating, but you do have options - as this article explains...

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Let’s say you are trying to find a lender who is willing to offer you a unsecured debt consolidation loan. But the banks say NO …. Citi says NO … Wells Fargo won’t take a flyer on you. So what do you do now ?

Well with the current financial situation and the ongoing credit crisis it’s just getting tougher and tougher to qualify for a debt consolidation loan. So if all you’re hearing is no, you are left with the following options:

First, you could simply not get a debt consolidation loan. Make a budget and itemize all your debts and prioritize them for repayments. In order to be successful you will need to cut your expenses and start forgoing the extras and living well within your means, that’s the only way you’re going to be able to pay down your debt on your own. I know it sounds difficult but in today’s world that is often the best solution and at the end of the most cost effective.

Second, you could pay some of your debts on your own, and then try again in six months to a year to get a consolidation loan to take care of what’s left. This way when you do reapply your overall debts are a lower, and your credit score more than likely will have improved, hopefully enough to make a difference. In addition provided you’ve not changed your residence or job, this added stability will reflect positively on your application.

Third, instead of a debt consolidation loan you could try a debt management plan, which is like a debt consolidation loan, but there is no interest. A not for profit credit counsellor can negotiate a repayment plan where you pay the debts in full, but at a reduced interest rate.

Another option is a consumer proposal. This is when a licensed professional administrator works out a plan with your creditors whereby you wind up paying only a portion of your total debts. At the end of the day many creditors are happy get a piece of something rather than all of nothing.

The fifth option would be to approach a family member or good friend and borrow the funds from them. If you wind up going this route it’s vital that you get everything in writing so as to avoid any confusion down the road and above all else make the payments, not doing so is a sure fire way to strain a relationship! Don’t be offended if you’re asked to pay interest, they’re not obligated to give you free money.

If all else fails, the final option is personal bankruptcy. Get in touch with a bankruptcy lawyer and or trustee, set up an appointment to go in and see them so you fully understand the ramifications both short and long term of filing for bankruptcy.

The good news here is that just because the bank says no, you don’t have to give up. There are other options out there and more than likely one of them will work for you!

About the Author:

Kam Brar is a licensed mortgage broker and has been directly involved in the lending industry over the past 10 years, bringing with him a wealth of knowledge and experience. His particular specialty throughout his career has been working with "challenge" customers, where it takes creative financing (and sometimes private loans) to accomplish their goals.

His role with ShangriLoan is that of a consultant and mortgage industry liaison.

ShangriLoan Ventures LTD ( does not provide loans or mortgages, and is also not an acting broker in any capacity. is an editorial & directory publishing service and an advertising intermediary connecting borrowers with brokers or otherwise services relevent to their specified needs. is compensated by its advertisers for referring qualified site users who submit a request for a lending/mortgage quote from advertisers who are matched to the users needs. Please see our compensation disclosure and privacy policy for full details on our operating procedures.

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