If you get behind in your scheduled payments for a loan or other form of credit repayment, your bank or lender may eventually hit you with a default notice. When this happens, your account becomes closed due to excessive lateness, and a default notice appears on your credit report. This negative entry on your credit report can lower your credit score and make it difficult to obtain other forms of financial support, including loans, mortgages and credit cards. However, many times consumers receive default notices when they were not properly warned of an impending default. When this happens, there are steps you can take to remove your default notice.
Obtain a copy of your credit report. It is best to subscribe to a service, such as FreeCreditReport.com, which will offer consistent access to your credit report and credit score on a subscription basis. You will need to have access to your credit report in order to monitor the default notice as you seek to remove it. This process can take up to six months.
Write a letter to your bank stating that you had not received any notice of a default, nor a warning of an impending one. Ask the bank to present you with the original agreement upon which the initial loan was made, a copy of the original default notice, and a deed of assignment if the debt was sold to a collection agency. Have this letter delivered by either a courier, attorney, or through a delivery service requiring a signature upon receipt. This is to have proof that your letter was delivered; otherwise, the bank may claim it never received the letter, delaying your process.
Wait for your bank's reply. You will want one of two things to happen; either they will be unable to locate the required documents, or they will exceed the reasonable amount of time required to return this information to you, which in most cases is 30 days.
Remind them that they are lawfully required to provide you the documentation of your default notice. Your bank will be resistant to work with you and may send letters stating that they are processing your letter and putting together the needed documentation. In all your letters, cite the previous letter you had sent by its date, as well as the last letter received from your bank by its date, to make keeping track of the letters easier.
Threaten legal action if your bank's 30-day window has passed without them providing you the necessary documentation. Most banks will remove your default notice rather than be taken to court over a violation of your Consumer Credit Act.
Do all correspondence through letters, not over the phone. This way you can have a paper trail of your interactions and don't run the risk of saying the wrong thing on the fly.
Do not accept a "default satisfied" in place of removal. This is not any better than having an unsatisfied default.
Tips and warnings
- Do not accept a "default satisfied" in place of removal. This is not any better than having an unsatisfied default.