The direct debit is due on Friday and the account will not stretch to it.
What to know first: An ordinary unsecured personal loan is a non-priority debt, so it does not put your home or energy at risk the way rent or bills do (a secured loan can put your home at risk). But missing payments leads to arrears, a default notice of at least 14 days, a default on your credit file for six years, and eventually a possible county court judgment or collection agency. Contact the lender at the first missed payment, ask for a payment break or plan, and get free advice from StepChange on 0800 138 1111.
Based on StepChange on personal loan debt, StepChange on default notices and National Debtline on time orders. This covers England and Wales. For every option see the UK debt help hub.
What happens, in order
- You miss a payment. The lender may let you catch up on arrears or offer a payment break, depending on the lender and your agreement (StepChange).
- A default notice arrives. It gives a date to act by, and must give at least 14 days (StepChange). The notice itself does not hurt your credit rating. The default does.
- The account defaults. It is closed. StepChange says creditors can then add interest and charges, send reminders, seek a CCJ or pass the debt to a collection agency (StepChange).
- Collectors and court. See what happens if you ignore debt collectors and what happens if you ignore a CCJ.
Note: StepChange gives two different timings for when a loan defaults (two or three missed payments on one page, six months on another). So treat the first missed payment as the time to call.
Why a payment break is not free
This is our own illustration, not a quote: a £6,000 loan at 12% APR over 48 months costs about £158 a month and £1,584 in interest. Take a 3-month payment break where interest keeps building, then go back to £158 a month, and the balance grows to about £6,182 before you restart. It then takes 50 payments, and the total interest rises to about £1,882. That is roughly £298 more, in return for breathing room. Whether that is worth it depends on the alternative.
Your options
- Call the lender first and ask for a payment break or lower payments.
- A debt management plan lets you pay what you can afford across all your debts.
- If someone guaranteed the loan, they can be chased too. See what happens when a guarantor loan goes into default.
- StepChange, Default notices and missed payments
- National Debtline, Time orders on unsecured debt
Questions people ask
Is a personal loan a priority debt?
No, it is a non-priority debt, so rent, council tax and energy come first. But it is not harmless: after default, StepChange says creditors can add interest and charges, pursue a CCJ or pass it to a collection agency (StepChange).
How many missed payments before it defaults?
Sources differ. StepChange’s loan page says usually after two or three missed payments (StepChange), while its default notice page says a notice usually follows six months of missed or reduced payments (StepChange). Do not rely on a number. Contact the lender at the first missed payment.
Can I stop it defaulting?
Possibly. StepChange says paying the amount requested within the notice period may stop the account from defaulting, and a notice must give at least 14 days (StepChange). You can also ask for an affordable arrangement, but the lender does not have to accept it.
Will paying a defaulted loan remove it from my credit file?
Not early. StepChange says the default stays for six years (StepChange). See will a default be removed if I pay it.
What if someone guaranteed my loan?
StepChange says a guarantor such as a family member may have to repay it if you cannot (StepChange). Tell them early so it is not a surprise.
What is a time order?
National Debtline says it asks the county court to give you more time to repay a regulated credit agreement, and can change the monthly payment and length of the agreement (National Debtline). It applies to agreements regulated by the Consumer Credit Act 1974. Get advice before applying.
Last reviewed October 2026
DebtShift is not authorised or regulated by the FCA and this is general information, not personal advice. For free, confidential help contact StepChange on 0800 138 1111 or National Debtline on 0808 808 4000.