Although there will be some flexibility in the definition of a breakdown, we believe there should be general rules for the minimum period of arrears which should exist before a default can be filed. Equally there should be a maximum period after which, if anything is to be recorded with a credit reference agency, a default must be filed. The following are in line with the practices currently adopted by most lenders.Accounts should not be routinely filed as being in default where full payments or those due under a rescheduled agreement are fewer than three consecutive months in arrears.
Accounts should normally be filed as being in default where those payments due have not been received for six months.
This time framework only relates to filing defaults. It does not affect the lenders’ ability to continue to report accurately on the extent of arrears using monthly status codes. We recognise that may not always be appropriate for products which advance credit over either a very short or very long-term.
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