UK Credit Problems - Credit Arrears and Defaults

For most of us, it is virtually impossible that we will get through life without having credit, whether it be a mortgage, loan, credit card, store card or any other borrowed finance.

The biggest credit most of us will ever borrow is a mortgage to buy a property, but it doesn't matter how much you borrow, even with a small amount you can get in arrears. Whatever the sum some situations can mean that you end up defaulting on payments.

Credit Arrears

If you make the payments on time you will have no problem with your creditors.
If you fail to make the agreed regular monthly payment by the stated date then you will be in arrears. Should you miss a payment, then you might receive a polite letter informing you that you missed a payment and request that you make the payment within the next seven days.

If you miss several payments, and haven't made any payment at all then you will become further in arrears. You will be classed as having defaulted, by this time you will be threatened with court action and only by repaying some or all of the monthly repayments will you be able to stop this action taking place.

Credit Defaults

If you fail to make any repayments after 3 months then you are classed as defaulting on the credit agreement and court action will be taken.
This court action could lead to a CCJ (Count Court Judgement) against you. If you have defaulted on a mortgage or secured loan then your home could be reposessed and sold in order to recoup the debt that you owe.

You should seek independent advice on your debts if you find you are unable to manage them yourself. You have the opotion of consolidationg your debts in order to reduce the amount you have to make in repayments each month, if you take out one single loan in order to repay all other loans you have, then you can arrange that single loan at a more affordable rate for your own personal circumstances. This should make it easier for you to budget each month. You should try to come to an agreement with your creditors before they decide to take you to court.