What is Default notice?

The default notice is a formal letter from the creditor that states that the lender has breached the contract and he’s behind schedule with his payments. This notice is usually sent out after 3-6 months of missed payment. This is the first step that the creditor have to do, then they can take legal actions to gain the borrowers collateral and regaining their lost investment.

In this notice the creditor has to state his name and address, which points of the contract were breached, what does the borrower has to do and what will the creditor do if the borrower won’t comply. Before the default notice lenders cant take any legal actions, demand early payments, or terminate the contract. If the borrower has received the default notice then his default will be recorded on his credit history and it will stay there for the oncoming six years.