Due to its informal nature it is possible to add debt to an existing Debt Management Plan. However there are various consequents which need to be considered.
In this article:
- Is it possible to add debt to an existing Plan?
- What are the likely consequences?
- What if your DMP Provider refuses to help?
- How to avoid borrowing more during your Plan
Already in a DMP and need help? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential
Is it possible to Add Debt to an Existing Debt Management Plan?
You may have forgotten to add a debt originally. Alternatively you may have borrowed more since your Plan started. Your plan is flexible and so adding these new debts is possible.
However if you are unable to pay any more into the Plan each month the original creditors will then receive a slightly lower payment. You therefore need to understand the possible consequences of this.
It is always best not to get yourself in a position where you have to add new debts to an existing debt management plan if you can possibly help it.
Try to remember all of your debts before starting your Plan. A good way of doing this if you are not sure is to get a copy of your credit file.
What are the likely Consequences if you add debt to your existing Plan?
Plan will last longer
If any of the creditors you owe money to in your original DMP have already stopped interest and late payment charges, reducing the amount you pay them could mean they start to reapply these charges to your balances once again.
They will argue you have broken the agreement you made with them and so they are at liberty to add additional interest.
Once there is a track record or your new monthly payments being paid on time, your creditors should be persuaded to freeze their interest once again. However you should remember that the plan is an informal agreement and there are no guarantees of when interest will be frozen.
What if your Debt Management Provider refuses to Help?
If you are working with a debt management company who manages your Plan there is no reason why they cannot simply include the new debts for you.
Having said that, some debt management organisations may argue that you have broken the rules of your DMP by taking more credit. They may then react by telling you that they can no longer deal with you.
If this happens to you, the first option to consider is moving to a new debt management company. This should not be difficult. However, if you are currently with Stepchange, moving to a new provider might mean you have to start paying a monthly fee.
Alternatively, you should also take the opportunity to review whether the Plan is still the best debt solution for you. Given you now have more debt, you might be better off starting an IVA or going bankrupt.
How to Avoid Borrowing More during a Debt Management Plan
Once you are in your plan, the best advice is that you should not borrow more money if you can possibly avoid it.
Financial emergency – take a payment break
If you do find that you are still struggling to make your DMP payment and keep up with all of your other household bills, then you should speak to your debt management company. Discuss your living expenses budget with them again and look to reduce the amount you pay each month.
Or consider a different solution such as Bankruptcy which does not require you to make monthly payments if you cannot afford to do so.
Struggling with additional debt and want to learn more about your options? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential.
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Hi. I’m currently on a dmp, and have more debt. can I do another dmp or add on new debt to my current one. In may of 2018 I was laid off my job of 19 years. I’m working now but had to take a 6.00 hr pay cut. Can you help
Hi Judith
Yes, you can certainly add this new debt to your existing debt management plan. You should speak to the company that is managing your plan and they will do this for you. You will also need to explain that your income has fallen. They will need to recalculate your disposable income and see how much it has reduced. They can then reduce the amount you are paying into your plan accordingly.
If this reduction and extra debt means that your plan is simply no longer sustainable or you would be paying your debt back for over 10 years you might want to consider an alternative option to become debt free faster. You should certainly look at the option of an IVA. Bankruptcy might also be something to consider.
I have a DMP in place, had to get a new loan out due to my whole household having to isolate needed the money. My mum is going to pay the full monthly payments. Will this affect my DMP in place ??
Hi Ashlee
If your Mum is going to maintain the payments of the new loan in your behalf, you have nothing to worry about. You continue paying your DMP as normal. It will not be affected by your new debt as long as your Mum keeps the payments up.
The only time there could be a problem is if your Mum stops paying. The loan company would then chase you for the money. Given you would not be able to afford to pay both your DMP and the loan, then next thing would be to either add the loan to your DMP or consider a different debt solution such as an IVA which might be more suitable to manage the larger debt.
i have recently found plenty more debt and wondering if i can add this to my dmp?
Hi Corrie
In theory, it is possible to add new debt to your existing Plan. However, this will depend on the attitude of your debt management company. Some will help, others will say it can’t be done.
If your debt management company won’t help, you could stop your current plan and start a brand new one with another company. Alternatively, it might be a better option to stop the current plan and use a totally different debt solution (such as an IVA) which would help you resolve your debt faster.
I would be very happy to discuss your options with you if you like. The advice is free and without obligation. Please give me a call and we can have a chat (0800 077 6180).