Default Notices
What is a Default Notice?
Creditors are legally obliged to advise you formally in writing that you have missed a contractual payment or are in arrears with an account before taking any legal action; this is called a default notice.
For credit agreements regulated under the Consumer Credit Act, you must be sent a default notice, at least 14 days before any legal action is taken to enforce repayment.
If you are not sure what something means on the Default Notice, ask the issuer or contact Swift.
What Does a Default Notice Look Like?
It is a written communication from your creditor within which it will clearly state:
‘Default notice served under section 87(1) Consumer Credit Act 1974’
The Consumer Credit Act (1974) is a legal regulator, and this means that your creditor(s) have to issue you with a default notice before pursuing any further legal proceedings against you to acquire their debt repayments.
How Long Does a Default Notice Last?
In total, a default will stay on your credit file for six years. This is regardless of whether you have fully cleared the debt or not. This is because a default tells the creditor that there is a higher likelihood of you not making debt repayments than somebody without a default notice
What Happens if I Ignore a Default Notice?
Ignoring a default notice can lead to serious consequences. Your creditor(s) may take further legal action and this can lead to a County Court Judgement (CCJ) being taken out against you, which can have serious implications. Usually, the default letter that you receive will state what further action the creditor(s) aim to take if you do not settle your repayments with them.
Never Ignore A Default Notice
Read the letter carefully. It explains what you need to do, and what could happen if you don’t respond nor comply with its demands.
For other types of debts (for example a contractual dispute) you may receive a Letter Before Action instead.
Am I being taken to Court?
Not necessarily. While a default notice must be issued before any legal action is taken, it does not follow that this will always happen.
I’ve Received A Default Notice – What Should I Do?
Your rights and options depend on the type of agreement, and the law can be complex. Speak to your creditor to find out what options are available to you.