General question about what a default is?

funky1471

Hi,

I was just wondering what exactly does it mean when an account has defaulted?

Does that mean the account has essentially been closed because you failed to make payments, and then you would need to repay but could no longer use the account?

Is a default charge the same as a defaulted account?

The reason i'm asking is more out of interest as i'm confused as to if a "defaulted account" is the same as getting a "default charge"?

chanz4

dafault charge is where you fail to meet a term in you contract eg missed payment.

dafaulted account is where the agreement has ended as you have failed to rectify a breach in your contract

funky1471

Thank you for clarifying.

So when you are talking about if you "have any defaults" when somebody asks about your finances, does this mean defaulted accounts, or both defaulted accounts OR default charges?

izools

If you get a default charge, the account is in arrears and needs to be brought back up to date before it can be used again.

If you get a default notice, the account has fallen into default, and has been closed, as the debtor has failed to acknowledge requests to bring the account up to date. This normally happens when an account is 3-6 months in arrears. The debtor sends a final demand stating that the total amount owed is now repayable in full and refers the balance to a debt collector, either in house, or external, upon being closed.

If someone asks if you have any defaults, they refer to defaulted accounts. Default charges are not defaults.

If however someone asks if you've been in arrears, then you would say yes. Most creditors who ask this question only ask "Serious Arrears" or "Defaults"... so if you've never been 3+ months late, you have no problem

funky1471

Thanks, that's totally clear now :-)