Consequences of Stopping Contractual Payments

What Is a Contractual Payment?

A contractual payment is as it sounds; a payment that you have agreed to repay as part of a contractually agreed arrangement.

If you are struggling with debt, you must try to keep with your contractual payments – unless your budget restraints mean that you can no longer do so. If you find that you can no longer meet your contractual payments, the first thing you must do is contact your creditor directly. You may be able to come to an arrangement whereby you can pay your debts.

Unless you have arranged to deal with your arrears with your creditors, you must try to keep with your contractual payments – unless your budget restraints mean that you can no longer do so.


If you miss contractual payments for three to six months, your creditor is likely to default your account, which can have serious consequences as well as having a negative effect on your credit rating. This is the first step to your creditors starting further action to collecting the debt.

On your default notice letter, it will suggest that you contact a solicitor or Trading Standards for help. You don’t need to do this. This text is from 35 years ago, nowadays you can contact companies such as ourselves for no-obligation help and advice, or debt charities such as StepChange or the Money Advice Service.

Credit Rating

If you pay less than the agreed monthly repayment to your creditor, then your credit will be adversely affected. Which means that you will find it harder to get further credit. If your account goes into default, it will remain on your credit file for six years.

The only way to avoid a poor credit rating is to pay all of your bills on time. However, please be aware that a good credit rating is only important if you are planning on taking out further credit, and if you are in a position where you can’t pay your current debts, further debt may be a mistake.


A County Court Judgement (CCJ) is a legal requirement to repay your debts ordered by a court. A CCJ will appear on your credit record for six years, and will affect your ability to take out further credit.

Your details will also be added to a database called the Register of Judgments, Orders and Fines.


If you stop paying your contractual agreements then bailiffs may be called by creditors in order to recover their money. A creditor can only call in a bailiff if they taken you to court and obtained a CCJ and you failed to pay the CCJ.

As well as unpaid CCJs, bailiffs can also collect; Council tax arrears; Child maintenance arrears; Criminal fines; Parking penalties issued by a local authority; Tax and National Insurance arrears if you’re self-employed.