The purpose of a debt management program is to eliminate credit card debt and teach consumers how to manage their money.
If taking out a loan while trying to eliminate debt sounds counter-intuitive … well, that’s because it is!
It is possible to get a home loan and very possible to get a car loan, student loan or new credit card while you’re on a debt management program. Nonetheless, a good nonprofit credit counseling agency would advise you to slow down and weigh the risks before acting.
If you absolutely need a car loan because it means transportation to your job or a student loan because it means getting closer to finishing your degree, then yes, it makes sense to apply for the money.
However, if you enrolled in a debt management program because you had problems making on-time monthly payments, adding a significant amount of debt to your portfolio may be setting yourself up for even bigger problems.
And just a quick reminder: Some card companies void the benefits of a debt management program – lower interest rates, reduced monthly payment – if the consumer applies for new credit cards, while on the program.
That penalty does not extend to car loans, mortgages, student loans and other types of debt.