Creditors may often send you a variety of notices and letters in relation to your debt. Here are examples of the most common documents, together with an explanation of what they mean.
If you fail to make a payment as agreed with your creditor during your arrangement, the creditor will write to you requesting the payment by a specific date. The letter will advise of what will happen if you do not comply with the request.
Below are samples of the letters you may receive from creditors with an explanation of what they mean:
Non-Payment letter
If you fail to make a payment as agreed with your creditor during your arrangement, the creditor will write to you requesting the payment by a specific date. The letter will advise of what will happen if you do not comply with the request.
What to do:
Contact us to advise an agent why the payment was missed, this will enable us to keep your creditors informed.
Arrears Notification
An arrears notification is a formal letter sent to you by your creditors to recover any outstanding arrears that you owe. If a creditor has rejected a pro-rata payment offered by you, it is very likely that arrears will accrue on your account.
The arrears notification should be addressed to whoever is liable for the debt, and should state the amount of arrears being recovered. It will also confirm what will happen next to the account.
What to do:
Don't be concerned if you receive an arrears notification, as there is no action you can take to change your circumstances. Please keep this letter for your records; you do not need to notify your Personal Finance Manager in this situation.
Referral of the debt to an agency
A creditor is able to sell or pass your debt to an agency to recover. If this happens, the agency acting on behalf of the creditor will send a letter to you. This will confirm the balance owing, the original creditor and the account details.
Legal action may be threatened by the agency to recover the debt, but this is because the agency will not be aware of your circumstances or that you are with PayPlan.
What to do:
Please forward any referral letters to PayPlan. Your Personal Finance Manager will then contact the agency on your behalf to explain your circumstances and make an offer of repayment.
Default Notice
When you break an agreement with your creditors, under section 87(1) of the Consumer Credit Act 1974, a default notice is issued. As you are no longer able to maintain your original contractual repayments with your creditors, they are entitled to place a default notice on your credit reference file.
What to do:
A default notice stays on your credit reference file for six years from the date of issue. You can request that this be removed once the debt is repaid in full.
Please note that a default notice is automatically generated, and you do not need to be concerned. However, PayPlan do recommend that you keep this notice for your records although on this occasion, there's no need to notify your Personal Finance Manager.
Final Demand
A final demand is sent by a creditor requesting a certain amount of money to be paid to your debt by a specific date. Once a final demand has been issued, the creditor does have the right to pursue legal action. However, this is normally a computer generated letter, specifically designed to make you repay your debt as quickly as possible.
What to do:
Don't be concerned if you receive a final demand, as there is no action you can take to change your circumstances. Please keep this letter for your records.
Termination Notice
Mail order companies usually issue a termination notice when you have failed to make small monthly repayments. The creditor will then terminate the account, and it will be placed on your credit reference file as an unpaid debt.
What to do:
A termination notice is simply sent to advise you of these actions, and you don't need to notify your Personal Finance Manager. Please keep any notices sent to you for your records.
Legal Action Letter
Your creditors may send you a legal action letter as a warning that legal action is being considered.
What to do:
Don't be concerned if you receive a letter from the creditors stating that they intend to pursue legal action in the future. Please keep this letter for your records.
Statutory Arrears Notice
A statutory arrears notice is a letter creditors are required to send to their clients under the CCA (Consumer Credit Act), to notify clients of arrears on the account. This is sent as an annual statement.
What to do:
A statutory arrears notice is for information purposes only. In this instance you do not need to notify your Personal Finance Manager. However, please retain this letter for your records.
Statements
Statements are issued automatically by your creditor to keep you updated with payments received, any interest that is being added and when the next payment is due. It will also confirm any other costs that may have been added to your account. Statements are usually issued on a monthly basis.
What to do:
Make sure you check your statements for accuracy, then keep them for your own records. You don't need to send statements to your Personal Finance Manager.
Confirmation of Offer
When an offer of repayment is sent to a creditor, they will reply in writing confirming whether the offer is acceptable.
What to do:
Please forward any confirmation of offer letters to PayPlan to enable your Personal Finance Manager to keep your arrangement up to date.
If acceptable, the creditor will confirm the amount to be paid and the period of time for which you will be expected to continue making the payment. After this time, the creditor will usually request an increased payment and a copy of your financial statement.
Rejection letter
If a creditor rejects your repayment offer, they will confirm an acceptable amount in writing. If you are unable to afford this amount then the creditor will advise of their intended action.
What to do:
Please forward any reject offer letters to PayPlan to enable your Case Officer to keep your arrangement up to date.
Requesting a review
If your repayment offer is accepted for a specific period of time, the creditor will request a review of your account after this expires. PayPlan will send a copy of your current financial statement to your creditors.
What to do:
Please forward any letters which request a review of your account to PayPlan, to enable your Personal Finance Manager to forward the relevant information to your creditors.
Settlement Letter
A settlement offer letter would be received in the event that your creditor is willing to accept a percentage of the debt as a one-off payment, writing off the remaining amount.
What to do:
Please contact us as we have a specialist settlements team that can help with the settlement.
