Life has a way of throwing unexpected challenges our way. Sometimes, these challenges come in the form of financial difficulties, where keeping up with bills and other payments becomes overwhelming – or in some cases, impossible to keep up with.
When this happens, it's easy to find yourself in arrears—a situation where you owe money that is overdue. Let’s go through what it means to be in arrears, and what you should do next.
The term “arrears” means you have missed one or more payments on a debt or financial obligation, such as your car finance.
What is the difference between arrears and a default?
You may come across the terms “arrears” and “default”. Both are slightly different, so let’s explore:
| Arrears | Default |
|
Missed payments can happen from time to time: it could be there was an issue with your bank, salary, or there were insufficient funds in your account. |
If no payment or payment plan has been arranged and communication remains absent, a Notice of Default may be issued |
|
When you miss a payment, your account falls into arrears. This is another term for being behind with your payments. Being in arrears can impact on your credit score. |
This is typically done when your account is two or more months in arrears, although this will vary depending on individual circumstances. |
|
Don’t panic though, when you miss a payment, reach out to the team at Marsh Finance quickly to discuss your options. |
You are given 14 days to satisfy the Default Notice. At this stage, it is important you speak to us to come to an arrangement on the outstanding amount owed, as we will still be in a position to help you and prevent further action. |
|
Communication is the key; if we can resolve the matter swiftly and get you back on track we may be able to prevent it from impacting on your credit score. |
If no arrangement is made within the 14 days, the default may be registered with the credit reference agencies. This will negatively impact your credit score, making it harder to borrow money for things like a mortgage, phone contract, or subscription services. It will stay on your credit file for six years. |
Firstly, don’t panic but act now.
What happens when I call?
Our team will go over all the options and help you to make the right choice that’s appropriate for your financial situation. They will be able available to answer any questions you may have, and to guide you through this small bump in the road.
We may be able to offer you an extended payment plan, a temporary reduction in payments, or even a grace period. By communicating openly, you can often prevent the situation from escalating.
What happens if I don’t get in touch?
Many people avoid this step, thinking it will be uncomfortable or confrontational, but it’s actually the best way to resolve the issue as it helps us to understand what is happening, and also give you clarity on how to move forward.
We all need a little help from time to time, and here are some free resources that can help you with your overall financial situation:
When you’re feeling the pinch and need a little support with payments, take quick action.
Communicating openly with Marsh Finance, and using the resources available to you, you can get back on track. Remember, the most important step is the first one—reach out and start the conversation.
Ignoring the problem will only make it worse, but, you’re not alone – we are here to make this easier, so take control of your financial situation by picking up the phone.