Notice of Default – Simple Guide, FAQs, Tips & More

 When you miss a payment, you may get a ‘Notice of Default’, which is a letter from the person you owe money to. It means you need to catch up on your payments or you could have more trouble. Many people get worried when they receive one, so if you’re one of them, don’t worry – you’re not alone.

Every month, over 170,000 people come to our website for advice on money problems. We understand how you feel, as some of us have been in the same place and know how scary it can be.

To help you, we’ll explain:

• What a ‘Notice of Default’ is and what it means.
• What you can do if you get one.
• How a ‘Notice of Default’ can affect your credit file.
• What it means if debt collectors get involved.
• Ways you might be able to write off some of your debt.

We’re here to help guide you through this. Let’s dive in and learn more about ‘Notices of Default’ and what you can do in this situation.

Default Notices – What are they and what do they mean?

If you have received a Notice of Default, you’re probably feeling a little confused and worried. But you don’t have to.

I explain what a default notice really is, what you can do if you have received one, and how to resolve the debt.

As always, I insist you seek charity advice if you’re struggling to pay off your debts.

Is a default notice bad?

A Notice of Default is a sign that you are struggling to meet the payments agreed upon with creditors.

However, there are ways to respond and prevent your financial situation from getting worse – or even avoid court action. 

• You can always get free debt advice from charities like National Debtline or StepChange if you are worried about any letters sent by creditors. 
• Some debtors may need to consider formal and informal debt solutions, some of which can be accessed through those charities.
• And in extreme situations, you may need the services of an authorised and regulated debt management company. 

A debt management company, though not free, offer several services not usually available for free with charities. These professionals may be able to come to an agreement with your creditor when you could not, or even secure more favourable repayment terms.

What happens when you get a default notice?

After you receive a Notice of Default, you have an opportunity to repay the amount of money due on your account. You will usually be given at least 14 days to repay the missed payments or face further action.

So, What should you do next?

If you have received a Notice of Default and you have the money to pay what you owe without causing other debt defaults or difficulty, you should do so. 

This is crucial as the next steps after default notice are being sued in court, or the debt is turned over to debt collections.

However, missed payments usually mean the individual is struggling to afford their repayment agreement, so this is not realistic. 

In this situation, it is best to speak with the lender or creditor directly and explain your financial situation. 

They may agree to a more affordable payment plan that accommodates your needs so you can become debt-free. You’ll probably pay more interest, and it could take you longer to pay it off. 

Alternatively, you may want to seek advice from a debt charity registered in England and Wales. There are many independent debt charities in the UK (e.g. StepChange and National Debtline).

Scotland has its own registered debt advice charities (e.g. Citizens Advice Scotland).

On the paperwork you receive, you’ll notice that you are recommended to speak with Trading Standards or even legal experts. This is not necessary. The reason the communication suggests this is because the template was pre-written decades ago before debt advice charities existed. 

Can debt collectors pursue a default?

Creditors that issue default notices without then receiving the money owed can take further action. They could use a debt collection agency to chase you for the debt. This can be stressful. 

But you should remember that a debt collection company is not the same as bailiffs, and they do not have the same legal powers.

For example, these collection businesses cannot come inside your home or give the impression that they can repossess your goods and valuables. 

If you have defaulted, the lender could take more serious action by taking you to court. 

If the court finds you are liable to pay – or you don’t show up in court, they can issue an order. At this point, you should repay the debt. If you cannot afford to, you should negotiate with the creditor on an affordable payment plan.

If no agreement is made, they can use the order to enforce the debt, typically by employing bailiffs to collect payments or repossess your items. 

You’ll also be responsible for bailiff fees at this stage, which start at £75 but can escalate to hundreds of pounds. You can complain about bailiff fees by using one of our bailiff letter templates.

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How long does a default notice last?

A Notice of Default begins as soon as you receive it, and further action can be taken if you do not repay your debt within the time allotted. 

They will not ‘expire’ in the meantime. You can use that timeframe to get advice and search for the most appropriate debt solutions. 

Does a default notice appear on your credit file?

If you receive a default notice communication, it will not be reported and will not appear on your credit file.

But if you do not take action and your account ends up defaulting, this will is reported and will definitely affect your credit history. The default will harm your credit score. 

How long does a Notice of Default stay on your credit report?

The default will appear on your credit report for six years. This hurts your credit score and can stop you from taking out a loan or other credit in the future. After six years, the defaulted payment will be deleted.

How to check your credit report

If you are wondering if a default appears on your credit file, you could take a look for yourself. This and any previous debts within the last six years will show on your report. 

Search online for a registered credit referencing agency (e.g. Experian or Equifax) and use their credit checking service. You can usually sign up for free for a few weeks. This lets you see a detailed view of your credit report. But don’t forget to cancel your subscription in time. Otherwise, your account will stay active, and you’ll be billed.