Can you put a Guarantor Loan on a Debt Management Plan?
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
Can you put a guarantor loan on a Debt Management Plan (DMP)? This is a good question for anyone considering a DMP with an existing guarantor loan.
We have quickly recapped on DMPs below before answering this and related questions. If you are thinking about a DMP and have an outstanding guarantor loan, you need to know this.
Can you put a guarantor loan on a Debt Management Plan?
Yes, you can add a guarantor loan to a Debt Management Plan. But you and your guarantor must understand the implications of including your guarantor loan in the DMP. There is a chance that the guarantor loan provider will reject being included in your DMP.
Read on to uncover what can happen when you include a guarantor loan in a Debt Management Plan. You need to know the full story first.
What will happen if you include them?
If you include a guarantor loan in your DMP, there is a chance that the loan provider will reject being a part of the DMP and will then contact your guarantor to request full payments.
You need to be aware of this if you have yet to tell your guarantor that you are struggling to repay the loan, because they may find out directly from the loan company after you tried to include it in the DMP.
The guarantor loan provider has the right to reject being a part of the DMP – like any other creditor – and they also have the right to request repayment from your guarantor when you have failed to keep up repayments.
There may be a situation where the guarantor loan company accepts your DMP but simultaneously requests partial or full payments from your guarantor as well.
How a debt solution could help
Some debt solutions can:
- Stop nasty calls from creditors
- Freeze interest and charges
- Reduce your monthly payments
A few debt solutions can even result in writing off some of your debt.
Here’s an example:
Situation
| Monthly income | £2,504 |
| Monthly expenses | £2,345 |
| Total debt | £32,049 |
Monthly debt repayments
| Before | £587 |
| After | £158 |
£429 reduction in monthly payments
If you want to learn what debt solutions are available to you, click the button below to get started.
Can you leave the loan out and keep paying it?
It is possible to leave a guarantor loan out of a Debt Management Plan and keep paying it in full separately. This would be the only way to make your other debt repayments more affordable while not causing your guarantor to repay on your behalf.
If you manage to agree on a DMP with creditors while leaving out your guarantor loan, a review of your finances will be expected once the guarantor loan has been fully repaid. At this stage, it is likely that you will have greater disposable income, and creditors will expect this to be used to increase your monthly DMP contributions.
Can I get a loan while on a DMP?
It is not impossible to get a loan or residential mortgage while on a Debt Management Plan. However, if you are offered a loan or mortgage, the terms of the credit agreement are not likely to be as favourable as if you had repaid your debts first and built up your credit score again.
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Guarantor loans and DMPs (Quick Summary)
Even though you should add all of your loans to a DMP to show creditors you are treating them equally, it’s quite possible that a guarantor loan provider will request payments from your guarantor instead.
For this reason, you might prefer to keep it off your DMP application and tell your other creditors that you plan to increase DMP contributions once it has been fully repaid.
MoneyNerd has plenty more information on DMPs and we’ve answered plenty of other niche questions like this. If you have another DMP question, it’s likely we already answered it in one of our other free guides.
