## Introduction: The Myth That Creditors Can List Defaults Whenever They Want

Most people assume that if they owe money to a creditor, that creditor can list a default on their credit file whenever they feel like it. Perhaps when they get around to it, or when they decide they’ve waited long enough, or simply when they want to pressure the debtor into paying.

That’s not how Australian credit law works.

Creditors must follow strict timeframes before they can list a default on your credit file. These requirements are set out in legislation and the Credit Reporting Code. And the reality is, a surprising number of creditors fail to comply.

## The Two-Notice System: What the Law Requires

Before a creditor can legally list a default on your credit file, they must send you two separate notices with mandatory waiting periods between them.

### Notice One: The Section 6Q Notice

The first required notice is commonly referred to as a Section 6Q notice (named after the relevant section of the Privacy (Credit Reporting) Code). This formal notice must:

– Inform you that you have an overdue payment
– Specify the amount outstanding
– Request that you make payment
– Warn you of the potential consequences of non-payment

This notice serves as the first formal step in the default listing process. It puts you on notice that your account is in arrears and gives you an opportunity to address the situation.

### Notice Two: The Section 21D(3) Notice

After sending the Section 6Q notice, the creditor must wait at least **30 days** before sending the second notice.

This second notice, known as the Section 21D(3) notice, must:

– Inform you that you still have an outstanding debt
– Explicitly state that if you don’t pay, they intend to list a default on your credit file
– Provide you with a specified period to respond

This is your final warning—the creditor is putting you on clear notice that a default listing is imminent if you don’t act.

### The Final Waiting Period

After sending the Section 21D(3) notice, the creditor must wait at least **14 days** before they can actually list the default.

This waiting period ensures you have a genuine opportunity to make payment or contact the creditor before your credit file is affected.

## The Critical Three-Month Window

Here’s where many creditors come unstuck: after sending the Section 21D(3) notice, the creditor must list the default **within three months**.

If they miss this window, they cannot simply pick up where they left off or list the default at a later date. The three-month timeframe creates a use-it-or-lose-it situation for the creditor.

## Summary of the Required Timeline

Let’s put this all together:

1. **Section 6Q notice sent** → Creditor must wait minimum 30 days
2. **Section 21D(3) notice sent** → Creditor must wait minimum 14 days
3. **Default can be listed** → But must be listed within 3 months of the 21D(3) notice

This timeline exists to protect consumers. It ensures you have:
– At least 30 days to respond to the initial warning
– At least 14 days to respond to the final warning
– A defined window during which the creditor can act

## Common Ways Creditors Fail to Comply

Given the thousands of accounts creditors manage, errors in following this process are remarkably common. Here are the failures we see most frequently:

### Both Notices Sent Simultaneously

Some creditors send the Section 6Q and Section 21D(3) notices at the same time—often in the same envelope. This directly violates the requirement that the notices be sent separately with a minimum 30-day gap.

**Result: Invalid default listing.**

### Insufficient Waiting Period Between Notices

The creditor sends the second notice too soon—perhaps only two weeks after the first notice instead of the required 30 days. Even a few days short of the mandatory period can invalidate the process.

**Result: Invalid default listing.**

### Default Listed Before 14-Day Period Expires

The creditor lists the default on your credit file before waiting the full 14 days after the Section 21D(3) notice. Perhaps they were eager to escalate, or their system calculated the dates incorrectly.

**Result: Invalid default listing.**

### Default Listed Outside the Three-Month Window

The creditor waits too long after sending the Section 21D(3) notice and lists the default four, five, or six months later. By this point, the window has closed.

**Result: Invalid default listing.**

### Notices Sent to the Wrong Address

The creditor sends the notices to an outdated address, even though they had access to your current address. This might happen when you’ve updated your details with the creditor but their system continued using old records.

**Result: Invalid default listing.**

### No Proof of Notice Delivery

When challenged, the creditor cannot produce copies of the notices or evidence that they were actually sent. Without documentation proving compliance with the notice requirements, the default may be indefensible.

**Result: Invalid default listing.**

## Why These Errors Happen

Creditors process thousands of accounts through automated systems. They rely on bulk mailing processes and assume that if their system says a notice was generated, it was sent correctly and on time.

But automation creates opportunities for error:

– **System glitches** that generate notices with incorrect dates
– **Bulk mail failures** where notices don’t actually get posted
– **Database errors** that use outdated addresses
– **Process shortcuts** where staff skip steps to meet targets
– **Poor record-keeping** that fails to document what was actually done

When you actually audit a creditor’s records and request proof of their compliance, these cracks become visible.

## These Aren’t Technicalities—They’re Legal Protections

Some might argue that these requirements are mere technicalities. But they exist for important reasons:

– **Due process:** Consumers deserve fair warning before suffering a five-year mark on their credit file
– **Opportunity to remedy:** The waiting periods give consumers genuine time to address debts
– **Accountability:** Creditors must follow proper procedures, not act arbitrarily
– **Consumer protection:** The rules level the playing field between large creditors and individual consumers

When a creditor fails to follow these requirements, they haven’t just made a minor administrative error—they’ve failed to provide you with the protections the law requires.

## What Happens When You Challenge an Invalid Default

When a default listing is challenged on the basis of procedural non-compliance, the creditor has several options:

1. **Provide evidence of compliance:** Show they did follow all required steps correctly
2. **Acknowledge the error and remove:** Accept that procedures weren’t followed and delete the listing
3. **Dispute the challenge:** Maintain their position, potentially escalating to formal dispute resolution

In our experience, many creditors—when presented with a clear analysis of their procedural failures—choose to remove the listing rather than defend an indefensible position.

## How to Investigate Your Own Default

If you have a default on your credit file and want to assess whether the creditor followed proper procedures:

### Step 1: Obtain Your Credit Files

Get copies of your full credit reports from Equifax and Experian. Note the exact date the default was listed.

### Step 2: Review Your Records

Do you have any correspondence from the creditor around the time of the default? Look for the formal Section 6Q and 21D(3) notices. Check the dates they were sent.

### Step 3: Request Documentation

You can request that the creditor provide proof they sent the required notices and followed the correct timeframes. They should be able to produce copies of the notices and evidence of when they were sent.

### Step 4: Analyse the Timeline

Check whether the dates align with the legal requirements:
– At least 30 days between the Section 6Q and 21D(3) notices?
– At least 14 days between the 21D(3) notice and the default listing date?
– Default listed within 3 months of the 21D(3) notice?

## When Professional Help Makes a Difference

For many consumers, navigating the complexities of credit reporting law is challenging. Creditors have legal teams and compliance departments—individual consumers often don’t know where to start.

A law firm specialising in credit repair can:

– Formally investigate the creditor’s records
– Identify procedural failures that might not be obvious
– Make legal arguments the creditor must take seriously
– Pursue removal through appropriate channels
– Escalate through AFCA or court if necessary

## Key Takeaways

– Creditors must follow a strict two-notice process before listing defaults
– There are mandatory minimum waiting periods between steps
– Defaults must be listed within 3 months of the final notice or the window closes
– Creditors frequently fail to comply with these requirements
– Invalid defaults can be challenged and removed

## What to Do Next

If you have a default on your credit file and you don’t remember receiving those formal notices—or you think the timing might have been rushed—you may have grounds to question the listing.

The creditor had rules to follow. The question is whether they actually followed them. That’s exactly what a thorough investigation can reveal.