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I have received a default notice - what should I do?
First of all do not panic as it is not a notice of legal action! A notice of default is simply a form issued to by your creditor to advise you that you are in default of your credit agreement i.e. that you are not up-to-date with your repayments.
Before a creditor is able to take any legal action a creditor must issue the debtor with a notice of default as the first step towards legal action against you. This is the case if the credit agreement you are in is regulated by the Consumer Credit Act 1974; which is the case for the vast majority of legal agreements.
With this said, if you do receive a default notice, do not ignore it as this is a warning sign that you may have a financial problem.
The default notice will specify a time period for you to comply with the action of the default notice. This normally means you must pay the full arrears noted on the default notice within the time span. If the full arrears payment cannot be made, then the arrears should be paid before any court action begins. If you have other debts that you are struggling with you should seek advice from a credit counselor and make a pro-rata offer to all your creditors.
On the other hand if you have simply missed a couple of payments and are now in a position to increase your repayments to catch up on your arrears, contact the lender and calculate how much you can afford to pay towards the arrears and make an offer of repayment. If your offer is rejected as your creditor is demanding the full amount you should still make the payment anyway as it shows that you are willing to sort out your debt problems.
If you cannot afford to comply with the agreement and pay the arrears do not ignore the situation! There is a possibility that your creditor can make you bankrupt if the outstanding amount is greater than £750.
If you have other debts and find that you simply cannot keep up the necessary repayments to your creditors, it is time to act. Debt Plan Direct offer free debt advice and are able to negotiate with your creditors to come to a mutually acceptable repayment scheme. This will help you deal with the debt for which you have received a default notice and may stop any enforcement action.
Please contact a Debt Plan Direct adviser for more information on this subject on 0845 055 8152.
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