Can a guarantor loan be included in a DMP
You can include a guarantor loan in a debt management plan. However you need to understand the implications for your guarantor.
Included in this article:
- What happens if you include a guarantor loan in your DMP?
- Can you leave the loan out and keep paying it?
- Should you complain about the loan?
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What happens if you include a guarantor loan in your DMP?
When you start a debt management plan (DMP), the payments to each of your debts are reduced to an amount you can afford. As a result you no longer have to struggle to find enough to pay all of them each month.
However, if you include a guarantor loan in your plan, the reduced payments will cause a problem. The loan company will then contact the person who guaranteed the loan and demand that they pay instead.
Your guarantor will normally have to pay the full repayment amount each month. The loan company is allowed to start enforcement action against them if they don’t.
Even if a guarantor loan company accepts your Debt Management Plan, they can still demand payments from your guarantor.
Can you leave the loan out and keep paying it?
The only way avoid getting your guarantor involved is to keep paying the loan payments in full. You might be able to do this by leaving the loan out of your debt management plan.
You start your plan with your other creditors, this reduces the payments they get and will hopefully free up sufficient cash to allow you to continue paying your guarantor loan. Once this is paid off, you then increase your DMP payment so your other debts are paid faster.
Of course this solution will only work if you have sufficient surplus income to maintain your loan payment and a sensible amount into your debt management plan.
To start a DMP with your remaining creditors you will normally need to be able to pay at least £100/mth into the plan.
Should you complain about the loan?
Perhaps the guarantor loan you took was actually unaffordable. The fact that you are now struggling with your debts and looking to start a debt management plan would suggest this may have been the case.
In this situation you could make an affordability complaint against the lender. If you win the interest should be written off and you will only have to repay the balance of what you borrowed. In addition the guarantor would be released from the loan. The debt will then be treated as a normal loan and could then be included in your DMP with no further problem.
The person who guaranteed the loan could also make a complaint against the lender if they feel that they were never in a position to repay the loan if you could not. If they won, they would be removed as a guarantor and therefore would be no longer liable to pay the debt whether you pay it or not.
Struggling with a guarantor loan and need further advice? Give us a call 0800 044 5407 or complete the form below and we will get back to you.
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