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What are arrears notices 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 have missed your payment and asks you to pay the arrears immediately.

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

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

Default notice

When you are not making the payments you agreed to, and the arrears, you will normally get 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 have asked for, the creditor will cancel your credit agreement. At this point, you are in default and the creditor can put this on your credit file.

If you get a default notice, you should explain to the creditor that you cannot to pay the amount asked for 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.

Common questions about arrears and default notices

It is normal to get a default notice if you are making smaller payments to a creditor. Unless you can pay all your arrears and go back to the full payments you agreed when you first took out the debt, there is nothing you can do to stop the default notice happening.

We always recommend continuing to make your regular payments through your DMP.

A default notice is a letter explaining that your agreement will be cancelled if you don't pay the debt within 14 days. The default notice will appear on your credit file for six years.

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

A default notice is a normal part of the debt collection process. If you are making reduced payments to your debts, there is 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 are paying all you can through your plan.

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