diff --git a/changelog.d/permissions/3037.bugfix.rst b/changelog.d/permissions/3037.bugfix.rst
new file mode 100644
index 000000000..c783beaa1
--- /dev/null
+++ b/changelog.d/permissions/3037.bugfix.rst
@@ -0,0 +1 @@
+defaults are cleared properly when clearing all rules
\ No newline at end of file
diff --git a/redbot/cogs/permissions/permissions.py b/redbot/cogs/permissions/permissions.py
index 2e0aa9422..e3cd995b0 100644
--- a/redbot/cogs/permissions/permissions.py
+++ b/redbot/cogs/permissions/permissions.py
@@ -544,7 +544,7 @@ class Permissions(commands.Cog):
 
         Handles config.
         """
-        self.bot.clear_permission_rules(guild_id)
+        self.bot.clear_permission_rules(guild_id, preserve_default_rule=False)
         for category in (COG, COMMAND):
             async with self.config.custom(category).all() as all_rules:
                 for name, rules in all_rules.items():
diff --git a/redbot/core/bot.py b/redbot/core/bot.py
index acdffc957..796ed7a27 100644
--- a/redbot/core/bot.py
+++ b/redbot/core/bot.py
@@ -779,7 +779,7 @@ class RedBase(commands.GroupMixin, commands.bot.BotBase, RPCMixin):  # pylint: d
             for subcommand in set(command.walk_commands()):
                 subcommand.requires.reset()
 
-    def clear_permission_rules(self, guild_id: Optional[int]) -> None:
+    def clear_permission_rules(self, guild_id: Optional[int], **kwargs) -> None:
         """Clear all permission overrides in a scope.
 
         Parameters
@@ -789,11 +789,15 @@ class RedBase(commands.GroupMixin, commands.bot.BotBase, RPCMixin):  # pylint: d
             ``None``, this will clear all global rules and leave all
             guild rules untouched.
 
+        **kwargs
+            Keyword arguments to be passed to each required call of
+            ``commands.Requires.clear_all_rules``
+
         """
         for cog in self.cogs.values():
-            cog.requires.clear_all_rules(guild_id)
+            cog.requires.clear_all_rules(guild_id, **kwargs)
         for command in self.walk_commands():
-            command.requires.clear_all_rules(guild_id)
+            command.requires.clear_all_rules(guild_id, **kwargs)
 
     def add_permissions_hook(self, hook: commands.CheckPredicate) -> None:
         """Add a permissions hook.
diff --git a/redbot/core/commands/requires.py b/redbot/core/commands/requires.py
index c5b4187a4..b6f188de1 100644
--- a/redbot/core/commands/requires.py
+++ b/redbot/core/commands/requires.py
@@ -398,11 +398,9 @@ class Requires:
         else:
             rules[model_id] = rule
 
-    def clear_all_rules(self, guild_id: int) -> None:
+    def clear_all_rules(self, guild_id: int, *, preserve_default_rule: bool = True) -> None:
         """Clear all rules of a particular scope.
 
-        This will preserve the default rule, if set.
-
         Parameters
         ----------
         guild_id : int
@@ -410,6 +408,12 @@ class Requires:
             `Requires.GLOBAL`, this will clear all global rules and
             leave all guild rules untouched.
 
+        Other Parameters
+        ----------------
+        preserve_default_rule : bool
+            Whether to preserve the default rule or not.
+            This defaults to being preserved
+
         """
         if guild_id:
             rules = self._guild_rules.setdefault(guild_id, _RulesDict())
@@ -417,7 +421,7 @@ class Requires:
             rules = self._global_rules
         default = rules.get(self.DEFAULT, None)
         rules.clear()
-        if default is not None:
+        if default is not None and preserve_default_rule:
             rules[self.DEFAULT] = default
 
     def reset(self) -> None: