Arrears
Arrears are the amounts a borrower owes that have fallen overdue under a credit agreement. When a scheduled payment is not made on time, the account moves into arrears for the value of the missed payment. Arrears are a behind-on-payments position; they are not the same as a default, which is a formal status a lender records only once the breach reaches a defined threshold.
How arrears build up
Arrears are usually measured by the number of missed payments or the total amount overdue. A single missed payment puts an account "one payment in arrears"; if the next payment is also missed, the account falls further behind. The longer arrears persist, the closer the account moves to the threshold at which a lender may issue a default notice and ultimately register a default.
Clearing arrears
Arrears can be cleared by paying the overdue amount in full, or by agreeing a structured catch-up plan that adds an amount to future payments until the account is brought up to date. A lender that is told about a difficulty early can often agree forbearance — a temporary arrangement such as reduced or paused payments — rather than pressing for immediate payment in full.
Arrears in business lending
Credicorp lends to UK limited companies and limited liability partnerships, not to consumers. Where a company falls into arrears, the most effective step is to contact us before the position worsens. Because we lend to the company and take no personal guarantee, arrears sit against the business, not against a director personally. We would always rather agree a workable arrangement than let arrears harden into a default. Credicorp is an independent UK lender, not affiliated with Credicorp Inc of Peru, Credit Corp of Australia, or any other Credicorp entity outside the United Kingdom (Company No. 16093826; ICO ZC157682).
Related / See also
See default, forbearance, late-payment fee, Direct Debit and recovery. If your business is behind on payments, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/.