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Example Creditor Letters

Creditors may often send you a variety of notices and letters in relation to your debt. Here are examples of the most common documents, together with an explanation of what they mean.

If you fail to make a payment as agreed with your creditor during your arrangement, the creditor will write to you requesting the payment by a specific date. The letter will advise of what will happen if you do not comply with the request.

Below are samples of the letters you may receive from creditors with an explanation of what they mean:

Arrears Notification

An arrears notification is a formal letter sent to you by your creditors to recover any outstanding arrears that you owe. If a creditor has rejected a pro-rata payment offered by you, it is very likely that arrears will accrue on your account.
The arrears notification should be addressed to whoever is liable for the debt, and should state the amount of arrears being recovered. It will also confirm what will happen next to the account.

Referral of the debt to an agency

A creditor is able to sell or pass your debt to an agency to recover. If this happens, the agency acting on behalf of the creditor will send a letter to you. This will confirm the balance owing, the original creditor and the account details.

Legal action may be threatened by the agency to recover the debt, but if you communicate with the agency, it is unlikely they will take you to court.

Default Notice

When you break an agreement with your creditors, under section 87(1) of the Consumer Credit Act 1974, a default notice is issued. As you are no longer able to maintain your original contractual repayments with your creditors, they are entitled to place a default notice on your credit reference file.

What to do:
A default notice stays on your credit reference file for six years from the date of issue. You can request that this be removed once the debt is repaid in full. If you are defaulting on payments you should contact your creditors and explain your circumstances. Alternatively you can contact PayPlan and we can offer debt advice and support.
Please note that a default notice is automatically generated.

Final Demand

A final demand is sent by a creditor requesting a certain amount of money to be paid to your debt by a specific date. Once a final demand has been issued, the creditor does have the right to pursue legal action. However, this is normally a computer generated letter, specifically designed to make you repay your debt as quickly as possible.

What to do: Don’t be concerned if you receive a final demand, if there is no action you can take to change your circumstances. Please keep this letter for your records.

Termination Notice

Mail order companies usually issue a termination notice when you have failed to make small monthly repayments. The creditor will then terminate the account, and it will be placed on your credit reference file as an unpaid debt.

You may receive a ‘letter before action’ from your creditors warning you that legal action is being considered. It is important you don’t ignore this as your creditors could take you to court. Instead call your creditors and discuss your circumstances, they might be accommodating and accept a lower payment. If you are struggling with your finances and can’t afford to meet your creditor repayments you can also contact PayPlan. We offer free debt advice and support and we will be able to go through your options with you. Debt solutions are available for those who are struggling and we can assist you with these. 

Statutory Arrears Notice

A statutory arrears notice is a letter creditors are required to send to their clients under the CCA (Consumer Credit Act), to notify clients of arrears on the account. This is sent as an annual statement.

What to do:
A statutory arrears notice is for information purposes only. In this instance you do not need to do anything but please retain this letter for your records.


Statements are issued automatically by your creditor to keep you updated with payments received, any interest that is being added and when the next payment is due. It will also confirm any other costs that may have been added to your account. Statements are usually issued on a monthly basis.

What to do:
Make sure you check your statements for accuracy, then keep them for your own records. 

Confirmation of Offer

When an offer of repayment is sent to a creditor, they will reply in writing confirming whether the offer is acceptable.

If acceptable, the creditor will confirm the amount to be paid and the period of time for which you will be expected to continue making the payment. After this time, the creditor will usually request an increased payment and a copy of your financial statement.

If a creditor rejects your offer, contact us and we can talk you through your options.

Requesting a review

If your repayment offer is accepted for a specific period of time, the creditor will request a review of your account after this expires.

Settlement Letter

A settlement offer letter would be received in the event that your creditor is willing to accept a percentage of the debt as a one-off payment, writing off the remaining amount.

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