Default Notice

A default notice is a formal letter sent to a borrower from a creditor when an account is in arrears. Creditors are legally obliged to advise borrowers formally in writing if payments have been missed.

A record of the default stays on the borrower's credit file for six years. It can be harder or more expensive to obtain credit once a default has been registered. If more payments are missed, further defaults will follow; compounding the negative effect on the borrower's credit file.

What happens after I receive the default notice?

A default notice is legal process to protect the creditor and is not necessarily a statement of intent to start legal proceedings. However, they can't start legal proceeding without the issue of a default notice, which must allow the recipient seven days to comply with its demands. A default notice is a warning and should be taken seriously. If the default notice asks for immediate payment, instructions are included. Ideally, if you can afford the full amount requested, pay this within the specified time limit to avoid potential court action. However, if you cannot afford to pay and you have additional debts then you need to take steps to restructure your finances. [We can with help with this - see below]

The next step - court action

If a creditor has issued a default notice and has still been unsuccessful in recovering the money, they may wish to issue a County Court Claim form. This claim form gives details of the amount owed along with details of the creditor. You initially have 14 days to respond to claim unless you file an acknowledgement of service. This will then grant you another 14 days to either file an admission or defence. After the response has been submitted a County Court judgement will be registered against you. This will request that you either pay the balance immediately or by instalments

How Harrington Brooks Can Help

If you're concerned by default notices, take action now and seek advice straight away.

We are here to help.

Many of our clients approached use when faced with default notices and where keen to stop legal action, to which our intervention was successful.

The key is to act quickly. We'd analyse your finances, and produce a common financial statement. This is a document your creditors will agree is a fair reflection of your income and essential expenditure and you ability to repay this debt and any other debts.

The money you have in excess of essential expenditure is called disposable income, and only this need go towards paying unsecured creditors. This shows you're treating each creditor fairly and not showing preference to the ones shouting the loudest.

Once we've agreed an affordable and maintainable amount each month, we'd propose you enter into a debt management plan, or subject to qualification, an IVA. We'll contact the Creditor taking the legal action (and the Court if necessary), explaining you are now taking steps to repay your debts as can be reasonably expected. How early we can intervene is key to success.

If you're simply not able to afford anything towards your debts, this is called having no or negative disposable income. In such cases a debt relief order or bankruptcy may be an appropriate course of action. We advise on all types of debt problems and can help you find the best solution whatever the nature of the financial difficulty you're facing.