CCCS | InfoCentre | Scotland

Default notices

A default notice is a formal letter telling you how much to pay to bring the account up to date and when you need to pay.

Your creditor will usually send you a default notice after three to six missed payments. You are given at least fourteen days to pay.

A default notice will also warn you that if you cannot pay your account will be cancelled and be ‘defaulted’. This means you can no longer use this facility to borrow money. The creditor can then:

Demand the full balance is paid immediately
Sell the debt to a collection agency
Begin court action to recover the debt
If the agreement is hire purchase, start proceedings to repossess the goods

The creditor can only carry out these actions after the account has defaulted. If you pay back the arrears amount stated within fourteen days, no further action is taken. If future payments are missed a default notice can be issued again.

A default notice is only required for debts regulated by the Consumer Credit Act.

Accompanying the default notice will be an advice sheet from the Office of Fair Trading with contact details of organisations who can help, including ours.

If you are struggling to meet the payments to your creditors, or if you have received a default notice, we strongly recommend you use our online debt counselling service or call our Helpline on 0800 138 1111 for free, impartial debt advice.

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FAQs

How do I recognise a default notice?

A default notice will clearly state at the top of “This is a default notice served under section 87(1) of the Consumer Credit Act”.

There are several other important points that must be listed:

The type of credit agreement
The terms of the agreement which have been broken
The action that is required to prevent the account from defaulting, this is usually to pay off all arrears by a certain date
What action the creditor intends to take if this is not done. For instance, pass the debt to a collection agency or proceed with court action

How does a default notice affect my credit file?

The fact that an account has defaulted is recorded on your credit file for six years, and will make it harder to obtain credit for that time. A credit agreement can only default once.

Creditors often talk about default notices in terms that make them sound like a serious threat. If you want to preserve a good credit rating they are a valid threat. But if you have a record of missed or late payments and are having trouble managing your debts, your credit rating will be affected already.

Do I need to contact a solicitor or trading standards if I receive a default notice?

We recommend you seek advice from us if you have trouble paying your debts, and you should not ignore a default notice. It is unlikely you will need to contact a solicitor or trading standards.