Defaulting on loans makes it harder or almost impossible to obtain new loans later (such as a mortgage). The lender's job is to decide what is the probability of him being paid back. A person's pay record is a crucial part of this decision.

Debt-consolidation doesn't always solve the money problem. Borrowers are likely to continue spending as usual, unless drastic changes are made.

If a consumer goes to a legitimate lender for consolidation, the financial institution will look at his debt ratio. If the proposal after the debt ratio is too high, there is no way to structure it. A consolidation loan will likely be a secured loan in order to stretch the maturity to lower the outgo. If there's no collateral upon which to base the loan, it's turned down.

Nicole, hopefully your brother and his wife can work together with a common goal of a more secure financial situation. It will take persistence and time.

Copyright 2010 Deborah Nayrocker. All rights reserved. Permission to reprint required.

Deborah Nayrocker writes on personal money management topics, showing others how to take control of their financial future. An award-winning writer, she is a guest contributor with and a finance columnist with

Deborah is the author of The Art of Debt-Free Living and the Bible study Living a Balanced Financial Life. Her Web site is