Why do creditors issue default notices?
Written by Payplan Ryan on 26 November 2012
Receiving a default notice through your letterbox from one of your creditors can be upsetting and stressful, especially if you do not know what it is, why they sent it and what you need to do.
What is it?A default notice is a formal notification from a creditor to acknowledge a break in your credit agreement. A default notice can only be issued against debts that are regulated by the Consumer Credit Act. A default notice will include the following information:
- The full name and address of the creditor issuing the default notice and the full name and address of the borrower
- The type of agreement and full details of how the agreement was breached
- The early settlement figure (for fixed sum only)
- Action you can take to remedy the situation and comply with the agreement
- The proposed action by the creditor if you don’t comply with the agreement
Why was it sent?A default notice is issued to a debtor when they fall into arrears with their creditor. If you, for whatever reason, were unable to maintain the payments towards your agreement and you have been unsuccessful with reaching a new repayment plan with them, then they are entitled to issue a default notice before they can pursue legal action.
What to do next…Once you have received your default notice, it is extremely important that you act as quickly as possible as failure to respond within 14 days could result in further action. If you are unable to comply with the terms of the default notice, you will need to contact the creditor and come to a new agreement to repay the debt. If you are able to pay the debt within the set time period then you can write to the creditor and ask for the default notice to be removed after they receive the payment [cta]
Filed under Living in Debt