Defaults

What is a Default? - A default, or default notice, is a formal letter that is issued on behalf of a creditor to debtor. A default notice is a warning from a creditor that the terms of an agreement have been breached and that their intention is to recover the debt using legal action if you do not act in accordance with their requests.

A default is issued when prearranged payments have not been made leaving an account in arrears. A default will usually be issued when your payments are 3 to 6 months in arrears.

A default notice will establish the following:

• The debtors contact details
• The amount in arrears
• Details of the agreement and how you have breached the agreement
• How you can resolve the breach of agreement
• An early settlement figure if the debt is a fixed monetary sum
• Details of the legal action the creditor make take if the breach is not resolved.
• AND The creditors contact details

If a default is registered against you this will be recorded on your credit report for six years from the date of issue. Your credit report affects your credit rating. Having a default registered against you will decrease your credit rating, making it harder for you to obtain credit.

A creditor is obliged to issue a default notice when an agreement falls into arrears before legal proceedings can be set in motion. This allocates the debtor time in which to resolve the issue.

If the demand for payment can not be met then a creditor can choose to take the matter to court. The County Court can then order that payment be made, usually in monthly instalments. If this transpires you will then be issued with a County Court Judgement, or CCJ. As with a default, a CCJ will remain registered on your credit report for six years, and damages your credit rating further.

If you are fortunate enough to meet the demands of a default notice within seven days of issue then it is likely the creditor will take no further action. If you are unable to act in accordance with the requests laid out in a default notice, then you should seek legal advice.

If the debt is repaid, although it will continue to show on your credit report, it will be updated as satisfied. Bear in mind however that it is your responsibility to ensure that the information on your credit report is correct. You ought to obtain your credit report to verify that the default now shows that it has been satisfied. If not then you would simply need to contact the necessary Credit Reference Agencies to rectify this. How to get your credit report

If you have a default an option you may want to consider would be to apply for a Notice of Correction, which is a statement that you can have incorporated into your credit report to explain an entry on it. You should do this if you find there is information on your credit report that, although is factually correct, you believe gives a misleading impression of you.