One on the most popular questions we get asked is “I am in a debt management plan and need a loan”
While it’s not illegal to get a loan while in a debt management plan, it’s often a bad idea. Mant Charity DMP providers such as Stepchange or Payplan will usually have in their terms and conditions that you do not take out any further credit while on your DMP, but some private providers may well have a different policy. Furthermore all lenders in the UK will run credit checks and unless there’s been an administration error, your Debt Management Plan will show on your credit report as missed or late payments.
Improving Your chances of getting a loan if you are in a Debt Management plan:
Whether you want to apply for a loan or other forms of credit, here is some advice.
Tidy up your credit report as much as possible. Make sure all accounts are up to date. You should also look into paying off old debts if possible. Lenders like to see settled debts that have been paid on time when they are considering your loan application.
If you have been employed by the same company for a number of years, this will go in your favour. Changing jobs before applying for a loan is a usually a bad idea.
If you are considering a loan, it is a good idea to speak to your DMP advisor first. This is because your current creditors have most likely reduced or frozen their interest and might not want to continue with the plan if you are taking out more credit.
If you can possibly avoid it, it’s best to avoid taking on further credit during a DMP. If you take out a loan while on a Debt Management Plan there is a chance that your DMP will be withdrawn.
Loans and Debt Management Plans
Life sometimes brings surprises and we understand that sometimes people get unexpected costs while in a Debt Management Plan, there are other options for dealing with it than taking out a loan. The number one thing you should do when faced with an emergency expense is to contact your Debt Management Plan provider. It is entirely possible that your creditors may allow you to reduce your monthly payments, or even take a payment holiday for a couple of months.
If you are in a Debt Management plan and still feel that you need a loan, its best to speak to a friend or family member as obtaining credit via a mainstream lender his highly unlikely.