Notice Of Default

What is a Notice of Default?

A Notice of Default is a formal letter from a lender sent when you fall into arrears. The notice sets out the arrears and what you have to do to put things right within 14 days of receipt of the letter.

Failure to respond to a Notice of Default results in an automatic default, which appears on your credit file for six years, irrespective of whether you subsequently pay the account in part or in full.

The notice is required before creditor (lender) can take any of the following five actions:

  • Terminate the agreement
  • Repossess goods or land
  • Demand earlier payment of sums due under the agreement
  • Teat as restricted
  • Terminate or defer any of the debtor’s rights under the agreement and enforce a security

It applies to all types of breach of a regulated agreement, not just default in payment and is only applicable where the creditor intends to take one of the five types of action. A simple reminder not threatening one of these actions is not a Default Notice and not governed by Consumer Credit Act 1974.


Q: How does it affect my credit rating?

A: A notice of default will not appear on your credit report, but the default itself will if you do not pay off the outstanding amount within the 14 day period. Defaults can be damaging to your credit rating and seriously affect your ability to get credit.

Q: What happens after receiving a Notice of Default?

A: If the amount is not settled within the specified time, you will be issued a default.

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