What is a Time Order ?

A Time Order is something you can apply to a court for to stop interest adding up on the money you owe, and to reduce the instalments you have to pay.

A Time Order is a way of asking the Court to give you more time to pay a loan agreement if you have fallen behind with the payments.

A Time Order can change:-

• the amount you have to pay each month;
• how long the loan will last.
• In some cases it is also possible to change the interest rate.

A Time Order is particularly useful if you have a secured loan and your lender is threatening to repossess your home.

You can only apply for a Time Order if your credit agreement is regulated by the Consumer Credit Act 1974.

This covers credit agreements which were originally up to £15,000 if you took the loan out BEFORE 1 May1998.

If you took the loan out AFTER 1 May 1998 then the loan can be up to £25,000 and still be covered by the Consumer Credit Act.

Banks and Building Society mortgages taken out to buy your home are not covered. If you have a loan agreement it should state whether it is covered by the Consumer Credit Act. The agreement should have a heading: CONSUMER CREDIT AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974.

1) When a “Default Notice” or “Calling in Notice” or “Termination Notice” has been issued by your lender.

The lenders can issue a Default or Termination Notice if you have fallen behind with payments. Once you have received this you can make an application to the County Court, on form N440. There will usually be a fee of £130 to pay with your application. If you are on a low income or certain benefits you may not have to pay the fee. See the section on fees at the end of this factsheet.

2) When court action has been taken.

If a creditor has already taken court action you can still ask for a Time Order. You can do this when replying to the County Court Claim Form. If you already have a court order you can still apply for a Time Order but you will need form N244, which is available from the County Court offices. There will be a fee of £60 to pay with your application. If you are on a low income or certain benefits you may not have to pay the fee. See the section on fees at the end of this factsheet.

You can also ask the court to make a Time Order when a creditor is taking enforcement action such as applying for a Charging Order. You can ask the court to look at making a Time Order instead.

WHAT TYPE OF DEBT CAN YOU HAVE A TIME ORDER ON?

Unsecured Credit
If you have an ordinary credit agreement which is not a secured loan/second mortgage you would not normally ask for a Time Order to be made.

If a creditor has already taken court action, then you should apply to pay a judgment at a rate you can afford. You may want to ask for a Time Order if a Default Notice has been issued but the creditor is refusing either to accept your offer of payment, or to freeze the interest. If interest is still being added on the debt and the creditor refuses to take court action, then applying for a Time Order may be the only way to ask for the interest to be frozen. If the Court makes a Time Order and you keep up to date with payments, a creditor cannot apply for a County Court Judgment to be made.

This means a Judgment will not appear on the County Court Register or on Credit Reference Agency files, although the creditor may have registered the default on your credit file already.

Hire Purchase/Conditional Sale Agreement
If the creditor has not yet gone to court you can apply for a Time Order to reduce the payments, once you have had the Default Notice and the agreement has been called in.

When a creditor goes to court for a ‘Return of Goods Order’ you can ask for this to be suspended on the condition that you pay a fixed amount per month. This will usually be to pay the normal monthly instalment plus an amount on top to clear the arrears. You can ask the Court to make a Time Order if you cannot afford to pay the full instalments. The Court will often make a Court Order to let you keep the hire purchase/ conditional sale goods and pay off the agreement at a reduced amount without stating they are making a Time Order.

Secured Loans
A Time Order is most useful for this type of credit. You may use it to re-schedule a loan secured on your home in order to prevent possession action.

You can apply for a Time Order once the Default Notice has been issued or if your lender takes you to court to ask for a Possession Order.

Time Orders on Secured Loans

The law has not been entirely clear on what the court’s powers are when making a Time Order. Following a recent Court of Appeal case, Time Orders seem to apply in two situations:

• sometimes a Time Order can only deal with arrears, leaving the monthly payment unchanged, but with power to change the interest being added to the arrears. This is the case if the lender has only issued a Default Notice but the whole loan has not been called in. This is unusual as under the terms of most agreements the whole loan is called in automatically on default,
• sometimes a Time Order can be used to change the whole agreement, setting lower payment and interest charges, and in certain circumstances stopping interest being added at all. This can only be done when the whole loan has been called in by the lender, where the loan agreement has automatically terminated on default or once possession proceedings have started.

It should be easier to ask the Court to make a Time Order following a decision in the Court Of appeal in March 1995. The case is called Southern & District Finance plc v Barnes. This is very important as the Court agreed that the whole amount of money owing on the agreement can be included in a Time Order. Also the monthly instalments and the interest rate on the loan agreement can be reduced if the Court thinks it is just to do so, and it is needed to make the Time Order work.

• As part of the case of Southern & District Finance v Barnes, the Court of Appeal also said that Time Orders should only “normally” be made if someone is in temporary financial difficulty. You may have to show that your case is not a normal one or there is a good chance of your circumstances improving. The court may well give a Time Order only for a limited period. You may have to ask for exceptional circumstances to be taken into account to allow you to have a Time Order over a longer period. Argue that under Director General of Fair Trading v First National Bank (2001), making a Time Order over a longer period is possible if it “seems just in all the circumstances”.
• Anything you can say to show your situation is through no fault of your own will help when applying for a Time Order.

What should you request in a Time Order

• If you cannot afford the full instalment you need to ask for the loan and arrears to be re-scheduled.
• For the Court to be able to make a Time Order you must be able to afford to make an offer of payment. The court will consider whether you can afford to pay what you have offered or if you are offering as much as you realistically can.
• The Court has to look at the position of the creditor as well when deciding if it is “just" to make a Time Order. This means if you cannot make an offer at all or are unlikely to ever be able to pay off the loan the Court may decide not to make a Time Order.
• If you have asked for a new instalment rate but want to repay the debt within the same period of time then you can ask the court to change the interest rate, to allow you to do this.
• If you can afford to make the normal monthly payment you need to ask for a Time Order to fix payment on the arrears only. If you get a Time Order on the arrears only you may want to ask the court to reduce or freeze the interest in order to let you repay the debt over a reasonable time. This will be necessary where interest being added on to the arrears is the same or more than the amount you can afford to pay towards clearing the arrears.