You may need to borrow more while you are in a DMP. Whether this is possible or sensible will depend on your circumstances.

• Is it possible to borrow during a DMP?
• Getting a new mobile phone or car loan
• Can you borrow a cash loan while in a Plan?
• Could you remortgage during the Plan?

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Is it possible to borrow during a Debt Management Plan?

A DMP (Debt Management Plan) is not a legally binding agreement. As such there is no legal reason why you cannot borrow more while you are in the arrangement.

However applying for new credit will be an issue. If you want to borrow a cash loan, take out a car finance agreement or even get a new mobile phone contract you will normally face problems due to your poor credit rating.

There are some so called adverse lenders who may be prepared to lend to you. However they will charge high rates of interest. As such borrowing from them is not recommended.

If you already have a mobile phone on contract or car finance you can continue paying these during a DMP. However it will be difficult to start new agreements.

Getting a new Mobile Phone or Car Loan during a DMP

You may come to the end of your mobile phone contract during your DMP. If this happens you should be able to stay with your current provider out of contract. However your poor credit rating will mean it is unlikely they will let you sign up to a new one.

In addition it is unlikely that you will get a new pay monthly contract with a different provider. As such if you want to change your network you will normally have to settle for a pay as you go plan.

It may be possible to borrow to buy a new car during a DMP. However you will need to use a specialist car finance company. They might be willing to lend to you depending on your circumstances. However the interest you are charged will be relatively high.

Before buying a car on finance make sure that the monthly payments are affordable and you can still maintain your DMP.

Can you borrow a Cash Loan during a Debt Management Plan?

A high street bank is unlikely to lend to you during a DMP. However you might be able to borrow from a Payday, Short Term or guarantor loan company. They do offer cash loans to people who have poor credit ratings.

However borrowing cash in this way during your Plan is normally a bad idea because you will struggle to repay the new loan as well as your Plan payments. The result will be that you get into even more difficulty.

Ideally when you start your DMP you should try to save a small amount each month. You will then have this money to fall back on in case you have a financial emergency such as an unexpected car repair.

If you have no savings an alternative to borrowing more is to ask your creditors for a plan payment break. Your debt management company can do this on your behalf if you are using one.

Remortgage during a Debt Management Plan

If you are a home owner remortgaging your property could allow you to settle your Plan early. Alternatively you could use the cash raised for urgent home repairs or other emergencies.

Remortgaging your property during a DMP is not easy. However there may be adverse lenders who will consider offering you a mortgage or secured loan.

The criteria for getting a mortgage in your circumstances are relatively strict. You must have been in your Plan for at least 12-24 months. You must not have missed payments during this time and have no additional defaults.

If you are considering remortgageing during a DMP you will need to use a specialist mortgage broker.