Difference between Default and Default Notice please

frugaller

Hi

I have today received a Default Notice for one of my credit cards. What is the difference between a default and a default notice please? Is it the same thing?

I have searched but can’t find anything and I’m sure this will have been asked a hundred times before but I can’t find it, I’m sorry x

I’m on a self Managed DMP so i understand it won’t make any difference to that. It is currently on a 6 month freeze (started end of a March - paperwork, Start of April official) due to ill health and low income.

Thanks
Frugaller

Willing2Learn

This is from StepChange:

What's a default notice?

This is a letter from your creditor warning that your account is about to default because you're behind with your payments.

The default notice will give you at least two weeks to catch up with any missed payments. If you can do this your account will carry on as normal. If you can't pay the missed payments in this time your account will default.

A default notice is normally sent when you've missed, or paid less than the full amount for 3 to 6 months.

Default notices only apply to debts which are regulated by the Consumer Credit Act, such as credit and store cards, payday loans, personal loans and hire purchase.

and

What is a default?

An account defaults when you’ve broken the terms of the credit agreement and your creditor decides there’s no way you can get back on track.

Your account can only default once and this will be marked on your credit file. This is the point that your creditor may start further action to collect the debt.

If the debt was regulated by the Consumer Credit Act, you must get a default notice warning you before this can happen.

Basically, a default notice is a warning that the account is falling into arrears and that the terms of the credit agreement are about to be broken.

A default is when the terms of the credit agreement has been broken, and that the relationship between the creditor and the borrower is irreconcilable.

frugaller

Thanks for the quick reply Willing2Learn
So they could default me after two weeks from the letter?

sourcrates

Hi,

A Default notice is a statutory notice sent to you by your creditor if you fail to keep to the contractural repayments on a credit agreement.
The notice gives you 14 days in which to rectify the situation, otherwise a default will be registered on your credit file with the credit reference agencies.

If your in a DMP you can ignore the notice and allow the account to default, it’s standard practice, the notice must be sent by law, and does not take your DMP into account.

The sooner it defaults, the sooner the default will be gone (6 years).

All perfectly normal, don’t worry.

Edit : WTL beat me to it !!

frugaller

Thanks Sourcrates and Willing2Learn, really appreciate such quick replies x

Willing2Learn

It has been a while since I have had a default. If I remember correctly, most of my default notices gave me 28 days (but I could be wrong)

The default notice must advise you of how long the deadline is to make your payment. You must get at least 14 days though.

Edit: Lol - sourcrates has already confirmed it is 14 days

frugaller

Does it take very long after the 14 days for them to actually default me?

Willing2Learn

No. My creditors kept to the timetable precisely. But like sourcrates says, a default is a good thing. It means interest and charges are frozen. It also means your defaulted account will be automatically removed from your credit file earlier than would otherwise be the case.

Ideally, you want all your creditors to default you asap. If an account is not defaulted and is instead marked on your credit file with an Arrangement to Pay (AP) marker, it can leave your credit file in tatters for years longer than necessary.

sourcrates

Could be 28 days actually, it will tell you in the letter.

frugaller

Says 14

frugaller

Sorry, one more question I have just thought of. What will happen after the six month freeze now that it will have defaulted by then? Could they sell it on?