Turned Down For Debt Consolidation: A Windsor Case Study
Facing money problems at the beginning of your adult life is increasingly frequent for young couples who need to cover the cost of living, property purchase, and vehicle on an entry-level income.
For Janet and George (not their real names), a young couple from Windsor, the situation had gotten out of control.
The payments toward their mortgage, car loans, additional bank loans, and credit card bills outweighed their combined income.
That’s when Janet and George tried to find financial relief by applying for a debt consolidation loan.
But as they were turned down for debt consolidation, they found themselves with no way out of debt, except for taking a debt consolidation loan at rates they wouldn’t have been able to repay.
Janet and George’s situation is frequent among young adults, and here’s how our trustees can help with debt relief when you can’t get a debt consolidation loan.
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Understand the financial situation
For traditional money lenders, Janet and George are not the right candidates for a consolidation loan.
The main reasons they were turned down for debt consolidation were their low credit ratings and insufficient assets to provide loan security.
How did it happen?
It can be challenging to cover all your expenses when there is too much going out each month.
At this point in their lives, Janet and George have to pay for:
- Home mortgage;
- Additional home improvement costs and loan;
- Vehicle loans or leasing agreements;
- Maxed out credit card bills.
On the other hand, they have little assets and funds to cover their outgoings:
- Two beginning of career incomes;
- No real equity in the home;
- Low equity on vehicles.
If the situation sounds familiar, you ought to know that lenders are unlikely to accept your application for a consolidation loan.
Rather than finding a lender who will, you need to find a debt settlement solution that meets your situation.
Bankruptcy isn’t an option
For Janet and George, filing personal bankruptcy was not a viable option.
While they owned no asset that would have been affected, their combined income would have forced them to make surplus income payments.
The couple wanted to start their life on a positive note that enables them to repay their debts, rather than to file for bankruptcy.
Consumer proposal, a tailored debt consolidation solution
With their trustee, they decided on a consumer proposal that would offer a manageable monthly payment to their creditor for 60 months.
What happens if the consumer proposal is turned down?
The consumer proposal is a negotiation process between debtors and creditors, orchestrated by the trustee.
Janet and George’s first proposal of $250 a month was countered with $350 a month by Windsor creditors.
Unlike a debt consolidation loan, there is room for negotiation when the initial proposal is turned down.
Creditors felt Janet and George could pay more, so with the help of their trustee, the final consumer proposal that was approved by creditors meets creditors and debtors’ needs with $300 a month.
Have you been turned down for debt consolidation in Windsor?
Call 877-879-4770 to find out if a consumer proposal could deal with your unsecured debt.