A debt agreement lets someone with financial hardships -- a young, cool couple with great taste, for example -- repay debts over a set period. The agreement will include all the debts, as well as a payment schedule. But even when things seem financially brighter, life can dump car breakdowns or medical emergencies on you -- and you might need to borrow again. Whether you can borrow money in a debt agreement depends on the contract you signed.
Your Debt Agreement Contract
Most debt agreement contracts prohibit taking on new debt while in the debt management program. Not all credit counseling contracts require this type of debt moratorium, but most do. Read your debt management contract to decide whether it prohibits taking on new debt or borrowing money.
Types of Loans
Some types of loans such as mortgages may be allowed in a debt management program. Mortgages are considered "good debt" as far as your credit report is concerned. You'll need to show a history of good payments and be in the debt management program for at least six months. Other loans like auto loans, payday loans and unsecured credit may be obtained without permission, but could void your debt agreement program when they show up on your credit report.
Your biggest question is this: Should you borrow money when you're already in a debt agreement plan? Consider why you are in the program to begin with. You overextended your finances by borrowing money and accumulating debt. Accumulating more debt while in a debt management program is counter-productive to your goal of being debt free.
When in doubt, as your credit counselor whether you can borrow money. They know all the information in your debt agreement contract and give you an exact answer to your question. Never take on new credit without informing your credit counselor. You risk voiding your debt agreement contract and end up in worse financial straits.
- Hemera Technologies/AbleStock.com/Getty Images