All credit card or personal loans in the UK should be regulated by the Consumer Credit Act 2006. Before your creditor can take legal action and the payments are in arrears they must issue a Default Notice. To check your agreement is covered by the Consumer Credit Act 2006 call your creditor or check the agreement.
A Default Notice should include:
What action the creditor intends to take, if you fail to comply with the agreement.
The full name and address of the Borrower and of the creditor issuing the Default Notice.
The type of agreement and details of how the agreement was breached.
What action you can take to remedy the situation and comply with the agreement.
What the early settlement figure is (fixed sum only)
Receiving a Default Notice does not always mean that the creditor intends to take legal action. It must allow you at least 7 days to conform to any action required.
If payment is required it will include instructions.
Alternatively if you have other debts as well you should seek advice and possibly make pro-rata offers to all your creditors
Once the requirement to send a Default Notice has been done the lender can start any court action for the recovery of any money owing, this is done by issuing a Claim Form. It is essential to have early communication with the lender to have a mutually acceptable agreement as this can often prevent any further action.
A County Court Judgement (CCJ) will be registered as a result of court action and an Order by the court that the debt is repaid in full immediately or by installments.
If the creditor is owed more than £750 he can consider making you bankrupt, although this is rare creditors can act together to make the amount required (£750) also you will find that creditors will use bankruptcy as a threat to achieve repayment of a debt and might not intend to follow it through. Any threats issued by HM Custom & Excise must be taken extremely serious.
