Action

What does it involve?

What should I do?

Default notice

Once your account falls into arrears your creditors will issue you with a default notice. This is a legal requirement-they have to formally let you know that you are in arrears.

The notice also allows them to transfer your debt to either a debt collection agency, solicitors or take court action:

Do not ignore the notice:
Contact your creditors immediately.

You should still be able to negotiate reduced payments with your creditors if you have not already done so. Most creditors are unlikely to take court action if you are maintaining regular payments.

Solicitors

Creditors may pass your account to solicitors who will act in a similar way to a debt collection agency to chase you for the debt. Alternatively the creditor may instruct the Solicitor to take court action on their behalf.

It is not too late to make an offer of payment with the solicitor.

Send a letter explaining your financial situation, include your financial statement and list of creditors.

Debt Collection agencies

Some creditors do not wish to collect reduced payments and may sell or transfer your account to a debt collection agency.

The agencies may contact you either by letter or in person.

Letters may be quite strongly worded and may ask for settlement in full, or even threaten legal action.

Equally you may feel quite intimidated by someone calling at your home.

Some agents can get quite aggressive and abusive-if this happens refer to the

Negotiation Skills Development Guide on dealing with threats and intimidation.

Do not ignore them: If you ignore their calls or visits they will persist and this can become very stressful. By trying to reach an agreement with them at the outset you can avoid this stress.
Do not panic: You should treat them exactly the same as your creditors by making an offer of payment you can afford, supported by your financial statement and creditor list.
Remain firm: If the agent demands a higher offer of payment tell them you cannot pay what you haven’t got and repeat your offer. Do not feel pressured into offering them more than you can - stick by your offered amount and refer to your financial statement.

Know your rights: See the Negotiation Skills Development Guide-Dealing with threats and intimidation.

Court Action
(Scotland = Sheriff Court)

If you don’t make your contractual monthly payments to your creditors, and you have received a default notice, your creditors can decide to take legal proceedings. They can do this whether you are paying them an agreed offer of payment or not.

If you are paying the most you can, because that is all you can afford then you should make the same offer of payment in reply to the court forms. (see next section)