Have you ever found a Notice of Sums in Arrears (NOSIA) in your mailbox and felt a wave of uncertainty wash over you? Dealing with a NOSIA can be a daunting experience, especially when you see the amount due. But there are methods you can handle it.
But what could these options be, and how might they change your approach to resolving NOSIA debt? Stay tuned to find out.
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Consumer Credit Agreements- What Are They?
Consumer Credit Agreements are types of finance agreements that you enter into.
Some examples include:
- Store Cards
- Personal loans (include secured loans, but not Credit Union loans)
- Hire Agreements
- Credit Cards
- Hire Purchase Agreements (Including PCP Agreements and Conditional Sales)
Once you take up a Consumer Credit Agreement, you’re obligated to make the contractual payments on time without any delays. But not everyone can make payments on time. Thus, the Consumer Credit Act 1974 outlines what should happen in a situation where you fail to make a payment on time.
This is when a Notice of Arrears becomes important. This is the notice that lenders should send once an individual misses two or more instalments under a Consumer Credit Agreement, such as a credit card or personal loan. The next sections will explain this in detail.
What is a Notice of Sums in Arrears (NOSIA)?
Notice of Sums in Arrears (NOSIA) is a crucial letter from your loan provider. It alerts you about at least two missed payments on your loan.
The notice includes information on the amount you owe and requests you to contact your lender. Why? To discuss options and potentially agree on a repayment plan. Note that even if you’ve already agreed on a plan, the NOSIA will still arrive.
If you receive NOSIA, before responding, pause and plan. Crafting an accurate budget is vital. Because without it, you might agree to a plan that’s unmanageable, leading to more debt.
NOSIA, standing for Notice of Sums in Arrears, isn’t the end. If you’re struggling to meet the full payment by the due date, numerous options exist.
If you receive any letters after a NOSIA, it’s called SNOSIA. Standing for Subsequent Notice Sums in Arrears, a SNOSIA is sent every six months if your account is still in arrears. It’s like a continuous reminder. Also, expect to receive a NOSIA even if you have agreed to a payment plan.
So, said in short:
- NOSIA: sent to inform you that you’ve missed two payments or more
- SNOSIA: sent to inform you that your account is still in arrears
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Is a Notice of Sums in Arrears (NOSIA) a Default?
No. While a NOSIA indicates missed payments, it’s not the same as a default notice. However, this is a notice that they should send before they can post you a default notice, which usually includes legal threats.
You will receive a default notice if you are in arrears. The notice warns you to pay the full amount within two or more. This is the first step (out of the three) that they take before they take you to court.
So what sets a default notice and a NOSIA apart is:
- NOSIA: gives you space to negotiate how you would like to clear the due amount
- Default Notice: A notice warning you to pay before they take you to court
Why Was I Sent a Notice of Sums in Arrears (NOSIA)?
If a NOSIA has landed in your mailbox, it’s because you’ve missed two or more payments on your credit agreement. This could happen for various reasons, from oversight to financial difficulties.
Note that even if you have already agreed to a repayment plan, the creditor should still send you a NOSIA.
Lender’s Requirement to Send Notice of Sums in Arrears (NOSIA)
A lender should send a debtor a Notice of Sums in Arrears 14 days after:
- The original date, the debtor was supposed to make at least two payments.
- The total amount paid by the borrower is far less than the total amount that they were supposed to pay by the deadline.
- The amount of the shortfall is not less than the amount of two payments.
- The lender is not already required to send a Notice of Sums of Arrears to the debtor.
- The debtor does not owe money to the creditor from a previous judgment on the same agreement.
In a situation where the debt is due at intervals of one week or less, the lender should send the NOSIA 14 days after:
- The date when the debtor was supposed to have made at least 4 payments.
- The sum of the shortfall is no less than the amount of 4 payments.
- The total amount paid by the debtor over the last 20 weeks is way less than the total amount that they should have paid during that period.
The creditor should then:
- Send the debtor notices at intervals of no less than six months.
- They should do this until the debtor clears the arrears or a court judgement has been made about the agreement.
What if Your Lender Fails to Send You a NOSIA?
The debtor is required to issue this as part of the debt enforcement process. If they don’t, they cannot legally enforce the debt until they comply with this regulation. This technicality could provide you with extra time to organise your finances, seek advice, and potentially negotiate a favourable repayment plan.
Also, the debtor will not be obligated to pay:
- Any fees or interest that have been gathered during this period
- Any default amount that the debtor could have paid during this period
- Any default amount that the borrower could have paid after the end of that period in connection with a breach of the agreement that has occurred during that time.
Applying for a time order
The debtor should apply for a time order if they cannot pay the arrears within 14 days. Also, note that:
- The borrower does not have to wait for the creditor to send a default notice.
- They should send the creditor a notice of intent.
- They should send this along with a proposal for paying off the arrears.
Debt Solutions to Write Off Debt
Confronting NOSIA debt can feel overwhelming, but there are numerous avenues you can explore. There are many debt solutions available in the UK that you can consider.
- A Debt Management Plan, for instance, allows you to consolidate your debts and make manageable monthly payments.
- An Individual Voluntary Arrangement (IVA) could also be an option, offering a structured repayment plan over a fixed period.
But note that while choosing the right debt solution will help you to write off debt, the wrong one might worsen your situation. This is why we recommend you reach out to a debt charity for advice. Alternatively, feel free to fill out our online form, and our MoneyAdvisor team will guide you.
A list of debt solutions available in the UK are as follows:
Other Information Present in the Initial Notice of Sums in Arrears (NOSIA)
NOSIA letters are not just random notices. They’re actually regulated by the Financial Conduct Authority (FCA). But what specific information must these letters include?
- Key Components of NOSIA: First off, the letter must clearly state that you’re behind on payments. It’s not just about stating facts; it’s also about opening a dialogue. The letter should encourage you to discuss your situation with the loan company.
- Essential Contact Details: Contact information is more than just a formality. It’s your direct line to discuss options and ask questions. The letter also specifies the exact amount you owe.
- Understanding Your Debt: Knowing the amount is one thing, but what about additional charges like interest? NOSIA covers this, too. Plus, it includes details about any existing payment plan.
- Further Guidance: For a complete understanding, the FCA page offers full details on what your credit company should include in a NOSIA.
Will a Notice of Arrears Show on My Credit Report?
No. NOSIA is a mandatory legal letter from your lender, not a credit report entry. While NOSIA itself doesn’t show up, the missed payments that triggered it do. These missed payments get registered on your credit history.
The missed payments noted due to NOSIA can slightly damage your credit score. This drop might make future loans or credit harder to get.
You can stay updated about your credit history through agencies such as:
- Experian
- Equifax
Remember, always choose a site that’s registered and regulated by the Financial Conduct Authority.
Additional Information and Support
Navigating the complexities of a NOSIA can be challenging, but you’re not alone. There are numerous free, regulated advisory services available to assist you. These debt advice organisations will be able to provide you with further guidance and personal advice regarding your issue.
You can also reach out to a debt charity. There are many debt charities available in the UK, and they offer advice and support for free. Some debt charities you can reach out to include:
- StepChange
- Citizens Advice
- National Debtline
- Debt Advice Foundation
Key Points
- NOSIA stands for Notice of Sums in Arrears, a legal notification from a loan provider about at least two missed payments on a loan agreement.
- Receiving a NOSIA does not mean you are in default. It is a preliminary alert to rectify missed payments before escalating to more serious actions like a default notice.
- A NOSIA is sent when you miss two or more loan payments. It is a regulatory requirement, even if you are on a repayment plan.
- There are various debt solutions available, such as Debt Management Plans and Individual Voluntary Arrangements, to help manage NOSIA debt.
- If a lender fails to send a NOSIA, they cannot enforce the debt until this legal step is completed.
- As regulated by the Financial Conduct Authority, a NOSIA must include specific information like the amount owed, contact details of the lender, and encouragement for borrower-lender communication.
- While a NOSIA itself doesn’t appear on a credit report, the missed payments that trigger it will potentially affect your credit score.
- It’s advised to regularly check your credit history through authorised agencies to understand the impact of any missed payments.
- The article suggests consulting the Financial Conduct Authority’s page for more detailed information on NOSIA requirements.
