How to Handle a Default Notice From a Creditor
When you receive a default notice from a creditor, this is considered a formal letter. In most cases, you will receive this letter as a way to contact you for either coming current with your arrears or making arrangements for a payment plan. By law, creditors can send out default notices to delinquent customers who have missed their payments for up to six months and as little as three months.
Receiving the Notice
When you do get a default notice, it does not mean that the creditor is going to take legal action. Therefore, it is important that you acknowledge receipt of the notice and contact the creditor right away. The creditor is forced to send out a formal letter for accounts that are in arrears to get some kind of repayment arrangement at the earliest possible time. If you don’t’ contact the lender about your defaulted account, the creditor has no other recourse, but to take further action to retrieve the debt that is owed.
Usually, default notices contain suggestions about the steps needed to be taken to fix the situation. You will be given clear indication of the actions the creditor is ready to accept. This gives you an awareness of where you stand in the debt process, although, you should already know. If you don’t handle your debt, it will escalate and turn into bigger programs. Handling it will also help you to avoid legal actions that the creditor could file against you, which will subsequently result in a bad credit history.
You should know that a creditor can file a lawsuit against you once you receive the default notice and take no action to contact the creditor. In fact, as soon as the formal letter of default is sent out, the creditor is legally permitted to file a lawsuit against, even if you don’t contact the creditor. Therefore, it is in your best interest to do so at the earliest possible time. You don’t really want to have a judgment or lien against you and neither do you want debt collection agencies calling you.
Contacting the Creditor
A default notice suggests that you have not kept your end of the bargain as it relates to repaying the debt. You have shown that you are unreliable and that is what the creditor will assume because remember, the creditor does not know your situation. You should not even allow the debt to reach the default stage. Once you find it difficult to make payments for one or two months, you should contact the creditor.
When you receive the default notice, the steps that you need to take will be laid out in the notice. Read it carefully and take each step (one by one) to address the situation. You will usually have two weeks to repay the notice. If you repay the full balance within the specified time frame indicated in the notice, you can ask the creditor to remove the delinquency from your file.