It is not uncommon for someone who is experiencing financial hardship to look for a debt consolidation loan. In fact they will frequently agree to accept whatever additional finance a lender will make available.
Unfortunately taking on more loans while in a financial hardship is likely to contribute to the situation getting completely out of hand. New loans will not help deal with an existing out of control debt problem.
Solutions for financial hardship
This is where temporarily your income is reduced or your expenses have increased and consequently you are unable to manage to maintain all your debt repayments. Should this occur, you have the right to seek assistance from your credit providers as well as providers of essential services.
Do not be bullied by anyone into believing that if you fail to meet set repayments your assets will be repossessed or access to essential services cut off. Both lenders and providers of essential services are required by law to offer special treatment (be in temporary) to customers who are in financial hardship.
Therefore if you have lost a job, a business or a relationship but are in the process of getting back on your feet, you can ask for and should be offered a period of reduced repayments or even a repayment holiday. Some lenders will agree to expend the term of your loan in order to reduce repayments. Others will allow several months of non-payment.
The proviso is that you must reach an agreement with your creditors rather than simply stop payment. You have a right to ask for special consideration but no right to stop payment of your own accord.
Where financial hardship is semi-permanent
It will not be possible to agree reduced payment with a lender or service provider if your situation is not likely to improve. After all everyone wants to eventually receive the money owning to them.
Where you know that you are not going to return to prior levels of income, something different will need to be put into place to resolve outstanding and unaffordable debts.
Where the debt is in property loans, simply selling the asset will allow you to pay down debts to an affordable level. No lender with a secured mortgage against your assets will agree to accept less than the amount that is owed to them. They do not need to do that as their loan is secured.
Where significant debts are unsecured, you could try and offer the creditor a settlement, ie. 50% on the dollar but you pay these off immediately. Or perhaps 75% but they receive their money over several years (can arranged via a formal debt agreement or informally).
Try to engage your creditors in discussion and reach an affordable resolution that does not require you to take on additional high interest debt.