Q: Is it possible to take out a loan from a bank when one of your direct family members is already in debt?

A: It's probably because your friend does not have credit history yet, and requires a personal guarantor. Mom might not have been approved as a personal guarantor. This is speculation only, I cannot know why the loan was denied.

A: I agree with Ms. Lipan's short take, but there's more, of course.

Your question raises a plenitude of issues, most of them not questions of law:

With almost all of the nation's banks attempting to beef up their respective capital coffers, and the Fed causing not just a rise in interest rates, but also making major moves to tighten the liquidity of currency, lenders have necessarily tightened their lending criteria.

At the same time, a primary income-producing activity of lenders is to loan money. The catch is that they want to show a "performing asset", e.g., a loan that pays as and when due, on their balance sheets. That's a major determinant of stock price, and most CEO's salary and annual bonus is directly tied to stock price.

Another factor is "credit rating" (in 2005, the Republicans, with majorities in both houses of Congress and the Presidency, overhauled the Bankruptcy Code, but only after enjoying over a decade of "lobbying" money from bank and other lenders, making it more difficult to get Ch. 7 relief; by the time the Rs overhauled the bankruptcy code, the lenders had "self-corrected", in large part with the proverbial "credit rating" element of prudent lending. The credit bureaus are by no means perfect, but they are a seemingly justifiable excuse for lenders to reject loan applications).

There are other more specific influencers at work with your friend's loan difficulties, but your question provides none of the facts needed to steer her to a more accommodating lender.