When a person gets a loan or mortgage loan for residential property, he agrees to make periodic installments to the Loan Company or a bank with interest rate. If somehow he can’t make the loan installments on time, he is known as the default in payment.
Introduction to the Payment Default Notice:
In case a debtor becomes a defaulter in his loan or mortgage loan payments (in simple words; doesn’t pay the installments on time), the creditor has the obligation to formally inform him about the issue and ask him to come forward and resolve the dispute before the creditor takes it to the next level. Usually, a notice of default in payment is the final notice sent to the debtor and if he doesn’t respond to it, the creditor has all the rights to either file a case against him or cease his property as collateral or both. The notice of default in payment is just a formal way of asking the debtor to contact the creditor and resolve the issue without involving the court or law enforcement department.
Brief description of the Payment Default Notice:
When two parties engage in some deal i.e. loan or mortgage for real estate or a vehicle, they usually sign a contract or agreement. In this agreement, all the terms and conditions are enlisted including the clauses in case the debtor defaults the payments. This is why when a creditor finds out that a debtor hasn’t returned the debt or is short on the installments, he is legally required and obligated to first inform the debtor and ask him to settle the dispute out of court within a specific period of time i.e. 15 days or 1 month. If the debtor doesn’t reply to the notice within time or takes steps to resolve the dispute, the creditor then has the right to file a case against him and foreclose the collateral i.e. real estate property or motor vehicles. This notice is most common in vehicle loans and residential mortgage payments when a loaner doesn’t pay the monthly installment on time and defaults and the creditor or bank has the responsibility of informing him first about the default and then taking legal action against him including filing a case against him to pledging his property or selling it to collect the debt.
Key elements to include in the Payment Default Notice:
- Name of the debtor with complete address
- Name of the creditor or loan company with address
- Details of the loan or mortgage
- Details of the payment of the loan or installments for the mortgage loan agreed by the debtor
- Details of the payments of the loan on which the debtor is defaulted
- Period of time in which the debtor is asked to contact the creditor and resolve the issue out of court
- Legal actions that will be taken against the debtor if he doesn’t respond to the notice i.e. ceasing of debtor’s property or vehicle or foreclosure and sale of his property in public auction to collect the debt
- Date when the notice is being signed
- Signature of the creditor (i.e. bank or loan company)
Here is preview of a Free Sample Payment Default Notice created as fillable PDF Format,
Here is download link for this Payment Default Notice,