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Arrears and default notices

Arrears notice

Your creditor will send you an arrears notice when you don’t pay the amount that you originally agreed to. It normally says that you’ve missed your payment and ask you to pay the arrears immediately.

Arrears notices are normally automated letters sent out by the creditor's computer system.

You may get several arrears notices from the creditor until they decide to send you a default notice.

Default notice

When you’re not making your contractual payments, and you haven’t paid the arrears, you’ll normally receive a default notice. This is a legal document that creditors have to send to you if they want to take further action.  It will tell you how much you need to pay to stop the credit agreement ending.

If you don’t make the payment they’ve asked for the creditor will cancel your credit agreement. At this point, you’re in default and the creditor can register this on your credit file.

If you receive a default notice, you should explain to the creditor that you’re unable to pay the amount requested and you will continue to pay them through your DMP.

Once your credit agreement has ended your creditor can legally pass or sell your debt onto a collection agency.

FAQs

You'll normally get a default notice if you're making reduced payments to a creditor. Unless you can pay all your arrears and return to the full payments you agreed when you first took out the debt, there's nothing you can do to stop the default notice.

You should continue to make your regular payment through your DMP.

A default notice is a letter advising you that if you don't bring the account up to date within 14 days, the agreement will be cancelled. The default notice will appear on your credit file for 6 years.

This is a normal part of the debt collection process. The wording of the default notice is set out in legislation. You can ignore the paragraph which suggests contacting solicitors or Trading Standards.

A default notice is a standard part of the debt collection process. If you're making reduced payments to your debts, there's no way to avoid this.

If your creditors contact you and threaten to issue a default notice, don't make extra payments outside your DMP. Explain that you're paying all you can through your plan and you accept that the default notice can’t be prevented.