Debt & Money Problems
Loan Arrears
Falling behind on a loan is stressful, but acting early gives you the most options. Here is what happens when you miss payments on a personal loan and how to get back on track.
Key information
- Contact your lender as soon as you think you might miss a payment
- Missed payments can lead to a default and a mark on your credit file
- Most personal loans are non-priority debts, but loans secured on your home are not
- Free debt advisers can negotiate affordable arrangements on your behalf
On this page
What happens when you miss payments
When you miss a loan repayment, the lender will usually contact you and may add a charge. If payments remain unpaid, the lender can issue a default notice — a formal warning, under the Consumer Credit Act, that you must put things right within a set period (at least 14 days) or the account will be defaulted.
A default is recorded on your credit file and can make borrowing harder for several years. After a default the lender may pass the debt to a debt collection agency or take court action to recover it, so it is far better to reach an arrangement before it gets to that stage.
Secured versus unsecured loans
Most personal loans are unsecured, which makes them non-priority debts — serious, but the lender cannot take your home simply because you have fallen behind. A loan secured against your home or another asset is different: it is a priority debt, because the lender could ultimately seek to repossess the asset.
This is why it is important to identify what kind of loan you have. A free debt adviser can help you work out which of your debts are priorities and deal with the most serious ones first.
Getting back on track
Contact your lender as early as possible and explain your situation. Lenders regulated by the FCA must treat customers in difficulty fairly, and may agree to a reduced payment, a payment holiday, or freezing interest and charges. Putting a request in writing, backed by a budget, helps.
Your rights & protection
- Before a lender can take certain action under a regulated credit agreement, it must send you a default notice giving you at least 14 days to put things right.
- Lenders regulated by the FCA must treat you fairly in financial difficulty and consider reasonable forbearance.
- You can complain to your lender and escalate free of charge to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- National Debtline, Debt advice guides (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Dealing with debt (opens in a new tab). Accessed 22 Aug 2026.