PAYMENT DEFAULTS

Payment default, this happens when you cannot or simply will not meet your mortgage or other loan payments. If you default on your payments the lender is ultimately entitled to sell your home in order to recover the debt. Different lenders will have different views on how long they give you before they start the legal process, to recover the loan.

If you receive or have received a default notice what should you do? It is not notice of any legal action so don't panic! A default notice is simply a form issued to you by the creditor telling you that you are in default of your credit agreement - in other words, that you are not up-to-date with your repayments and are not sticking to your agreement when you took the loan out.

Many things can cause this to happen, such as illness, redundancy or even the death of your partner. If you wish to safe guard against any of these possible scenarios then we suggest you read the Insurance section of this website.

Self employed people may experience some short term difficulties. Whatever the cause there is help available.

Also if you’ve had defaults registered against you in the past it is still possible to get a mortgage or remortgage now.

Our advice is, if you receive a default notice, it is most important that you do not ignore it. A default notice is a warning that you may have a financial problem.

Creditors may use a default notice as the first step towards legal action against you. (When the credit agreement is one regulated by the Consumer Credit Act 1974, the default notice must be issued before legal action begins.)

If you have simply missed a couple of payments and are now in a position to increase your repayments to catch up on your arrears, contact the lender within seven days of receiving the letter. Calculate how much you can afford to pay towards the arrears and make an offer of repayment. Within virtually all cases the lender will agree to this. Repossessing your house is the last thing they want to do. Put your offer in writing and keep a copy for yourself. If in the unlikely event that your offer is rejected, make the payment anyway as it shows that you are willing to sort out the problem.

If you have other debts and find that you simply cannot keep up the necessary repayments to your creditors, it is time to act. Many organisations offer free debt advice and are able to negotiate with your creditors to come to a mutually acceptable repayment scheme. This will help you deal with the debt for which you have received a default notice and may stop any enforcement action.