I've received a default notice: What is a default and what now?
A default notice is a formal communication sent to you by your lender or creditor, indicating that you have missed payments or breached your contract terms, and that your account is now in default. It is a legal document that outlines the consequences of failing to pay your debt, and it is a precursor to further actions that the lender may take to recover the debt.
Receiving a default notice can be a daunting experience, but it is important to understand the implications and take action promptly. Here are some things you need to know about default notices:
What does a default notice mean?
When you receive a default notice, it means that your lender is initiating the process of defaulting your account. This means that your account is no longer considered in good standing, and your lender has the right to take further action to recover the outstanding debt.
What are the implications of a default notice?
A default notice can have a significant impact on your credit score and credit report. It can remain on your credit report for up to six years, and during that time, it can affect your ability to access credit or borrow money.
What to do if you receive a default notice?
If you receive a default notice, it is important to act quickly. The first step is to review the notice and ensure that the information is accurate. If you believe that there is an error, you should contact your lender immediately and provide evidence to support your claim.
If the default notice is accurate, you should contact your lender and arrange to make a payment plan to clear the debt. It is important to keep up with the agreed payment plan to prevent any further action from your lender.
If you are unable to pay the debt or need more time to arrange a payment plan, you should seek free, confidential advice from a debt charity or financial adviser. They can help you understand your options and create a plan to manage your debt. See our blog post about the different ways of paying off debt, by clicking here.
In conclusion, receiving a default notice can be stressful, but it is important to understand its implications and take action promptly. Ignoring a default notice can lead to further action being taken against you, and it can affect your credit score and future borrowing options. If you are struggling with debt or need advice, seek help from a debt charity or financial adviser.