What is Borrowing money with a Debt Management Plan ?
Borrowing money with a Debt Management Plan (DMP) refers to taking out a new loan while you are already enrolled in a structured repayment plan to manage your existing debts.
What is a Debt Management Plan (DMP) ?
DMP is an arrangement with creditors, often through a debt advice agency, where you repay unsecured debts (like credit cards or personal loans) at a reduced rate over time.
The DMP is usually set up through a debt advice charity or financial agency, which negotiates with your creditors on your behalf and the goal is to reduce your monthly repayments to an affordable level based on your income and essential living costs.
With a DMP, you make a single monthly payment to the debt management provider, who then distributes the money to your creditors and in many cases, creditors may agree to freeze interest and charges, though this is not guaranteed.
Can I borrow money while being under DMP ?
Yes, you can apply for new credit or loans while in a DMP, but most lenders will see it as a red flag on your credit file and may reject the application.
🟢 1. Risks and restrictions
- Taking out new borrowing while in a DMP can undermine the arrangement, since the plan is meant to show creditors that you are serious about repayment.
- Many lenders will consider you high-risk, so even if approved, the terms may involve higher interest rates or strict conditions.
- If your DMP provider finds out you’ve borrowed without telling them, it can cause issues with your plan.
🟢 2. Safer alternatives
- Instead of a new loan, you can ask your DMP provider to review your payments if you’re struggling with unexpected expenses.
- Some charities or credit unions may provide small emergency loans at fair rates, but only if affordable.
- It’s usually better to focus on managing current debts rather than adding new ones during a DMP.
Which private lenders in the UK provide cash loans despite DMP ?
Finding a private lender in the UK willing to offer cash loans during a Debt Management Plan (DMP) can be challenging—but there are a few options worth considering. Most mainstream lenders won’t approve such loans, but some specialist or secured lending providers might.
Possible Lenders for Those on a DMP
1. Credit Unions
- Often more flexible than traditional banks, credit unions may offer small loans to members under DMPs, as long as they demonstrate affordability and membership requirements.
2. Secured Lenders
- If you own property, secured loans may still be possible even if you’re on a DMP—since assets mitigate lender risk.
3. Specialist Lenders (e.g., Pepper Money)
- Some lenders like Pepper Money may consider borrowers with a DMP for products like mortgages or secured credit—as long as you’ve kept up regular repayments, typically for at least a year.
UNITED-KINGDOM
ICELAND LOAN WITHOUT INTEREST