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Debt Collection benefits of describing security on default notices

Monday, February 16, 2015 - Posted by Philip Harvey

In this article we look at the potential debt collection benefits of describing the security on a Default Notice.

The point was raised internally of the differing practices amongst our clients. Some clients when issuing a secured Section 88 Default Notice do not describe the security. Other clients do.

The possible debt collection benefits as we perceive them are;

  • It is spelt out more clearly to the debtor the possible consequence of not complying with the default notice. The debtor sees the make, model, colour of their pride and joy car. It is argued that this creates a much stronger emotive link to the consequence of non-payment. If this is so, the debtor will do more to attempt to remedy the account.
  • Where there are two or more secured facilities in default, that need two secured default notices, if you don't describe the security the debtor has no easy identifiable way of recognising what notice relates to what security.

Slightly off topic, we have also noticed some notices do not include the issue of a shortfall after sale, and the possible consequences to the debtor.

Note that this article is not discussing any compliance requirements of the National Credit Code and is not legal advice.

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