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

Scott Nelson MoneyNerd Janine Marsh MoneyNerd
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Scott
Scott Nelson MoneyNerd

Scott Nelson

Debt Expert

Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.

Learn more about Scott
&
Janine
Janine Marsh MoneyNerd

Janine Marsh

Financial Expert

Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.

Learn more about Janine
· May 26th, 2024
Could you legally write off some debt? Answer below to get started.

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For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

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notice of default

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

 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.

Could you legally write off some debt?

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

What are default notices 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 it 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.

How a debt solution could help

Some debt solutions can:

  1. Stop nasty calls from creditors
  2. Freeze interest and charges
  3. Reduce your monthly payments

A few debt solutions can even result in writing off some of your debt.

Here’s an example:


Situation

Monthly income £2,504
Monthly expenses £2,345
Total debt £32,049

Monthly debt repayments

Before £587
After £158

£429 reduction in monthly payments

If you want to learn what debt solutions are available to you, click the button below to get started.

Get Started

What happens when you get a 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.

Thousands have already tackled their debt

Every day our partners, The Debt Advice Service, help people find out whether they can lower their repayments and finally tackle or write off some of their debt.

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I’d recommend this firm to anyone struggling with debt – my mind has been put to rest, all is getting sorted.

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How long does it 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 it 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 it 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

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. 

Could you legally write off some debt?

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

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The authors
Scott Nelson MoneyNerd
Author
Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.
Janine Marsh MoneyNerd
Debt Expert
Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.