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A default notice is basically a form issued by the creditor
notifying that you are not up-to-date with your repayments as per your credit
agreement. The credit agreement is regulated by the Consumer Credit Act 2006.
Consumer Credit Act 1974 and has been updated to bring two further types of
agreement. Consumer agreements above £25,000, to reflect growing levels of
consumer borrowing and the small, one-man businesses and partnerships of up to
three people have now been included in the act. The Act also gives you the
option of using the Financial Ombudsman Service should you have complaint
against your lender.
The 2006 Act also give powers to the Office of Fair Trading (OFT) to investigate
applicants for consumer credit licences, to impose conditions on licences, and
to impose civil penalties of up to £50,000 on companies which fail to comply
with its conditions, appeals from which lie to the Consumer Credit Appeals
Tribunal and thence, with leave, to the Court of Appeal.
The Default Notice is the initial step towards legal action and also serves you
as a warning that you may have a financial difficulty. Once a default notice is
issued, legal action can commence. However contact your creditor in writing
within seven days of receiving the default notice to avoid legal action provided
you can afford to clear the arrears.
The following information should be provided on the default notice:
• Name and address of your creditor issuing default notice.
• Your name and address. Make sure that the details are correct.
• The type of agreement.
• Full details showing the breach of the agreement.
• Settlement figure (for fixed sum only).
• Action required by you to deal with the situation and conform to the
agreement.
• What course of next action the creditor will take should you fail to comply
with the agreement.
Show them how much you can afford to pay and how quickly you can bring the
account up to date. Default notices stays on your file for six years. During
this time it can be hard to get credit. Once you are in this situation it can
impact on other areas of your life and therefore it is vital to deal with it
immediately. If your offer is rejected, make the payment anyway as it shows that
you are willing to sort out the problem.
If you are in financial difficulties and have delayed in making regular
contractual monthly payment on time, a Default Notice can be placed on your file
by your creditors without your knowledge and despite solving the default. It is
wise to check your credit files.
Under the credit agreement the lender has the right to inform the credit
agencies of any default. You cannot have a default notice removed without the
consent of the relevant lender. Check if the creditor is willing to help to
remove the notice if incorrectly served.
The payments have now been brought up to date
The loan has now been fully repaid
Repayment schedule has been agreed
Agreed a revised repayment schedule
The default notice has been placed on your file incorrectly
The account has been terminated and written off as a bad debt
In any of the above cases you should write and ask if they are prepared to
remove the notice from your file and put this in writing to you.
You may be charged administration fee for this.
Once they have written and agreed that you no longer owe them any money the
credit reference agencies will then be able to remove the default from your
file. |
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The information provided is believed to be
reliable, but is not warranted to be accurate or complete and is for general
purpose only. You must get professional help before taking further action. The
information is provided in good faith, but without legal responsibility. |
