What is a Time Order?
A time order is a process by which you can ask the court to give you more time to pay back your loan if you have trouble to make the payments. Following parameters may change with a time order:
- Loan repayment period
- Monthly repayment amount
- Interest rate
If you have a secured loan against your home and you are defaulting with the payments, your lender may threaten to repossess it. Here, a Time Order can be an effective solution.
Apply for a time order – things to check?
You can apply for a time order only if your credit agreement is governed by the Consumer Credit Act 1974. This depends on when you took out your agreement and how much you borrowed at the time.
It covers a loan of:
- £15,000, if you had your credit agreement before 1 May 1998;
- £25,000, if you had your credit agreement between 1 May 1998 and 5 April 2008;
- Any amount, if you had your credit agreement on and after 6th April 2008 (unless it was a business loan).
However, if you have taken building society mortgages and bank loans to buy your home then it will not be applicable in a time order. Your loan agreement must state that it is covered by the Consumer Credit Act. (Check if your agreement mentions “CONSUMER CREDIT AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974” or not)
When to apply for a time order?
1. When an ‘arrears notice’ has been issued by your lender.
Starting from October 2008, it is a mandate for the lender to send you an arrears notice within 14 days if you have missed two payments as per your agreement. It should tell you how much you owe as per the agreement, the arrears and the added interest charges. You can apply for a time order after you have received an arrears notice according to the new rules. You must write to your lender and give them 14 days notice that you are going to apply for a time order. You must include in the letter details of the offer of payment you are going to make in your application. Do not forget to keep a copy of your letter as you will need to show this to the court when you apply for a time order.
2. When a ‘default notice’ or ‘calling in notice’ or ‘termination notice’ has been issued by your lender.
The lender can issue a default or termination notice if you falter to make payment on time. When you get this notice, you can make an application to the county court for a time order. In this situation, you do not need to write to your lender to give notice that you are going to apply at this stage.
3. When creditor takes court action.
You can still apply for a time order if the creditor starts taking court actions against you.
The procedure and forms you need to use depends upon whether you have a secured loan, a hire purchase/conditional sale agreement or unsecured loan. Normally they charge you for your application. If you are on a low income or certain benefits you may not have to pay the fee.
Loans covered by Time Order?
1. Unsecured credit
If you have an ordinary credit agreement which is not a secured loan/second mortgage then you normally do not need a time order. If your creditor takes court action, then you should apply for a time order so that you can pay back under considerable terms.
The court makes the order for you to pay in affordable installments. Normally, interest is frozen by the Court under the Consumer Credit Act.
If your creditor issues a default notice and refuses either to accept your payment, or to freeze the interest rate then you can apply for a time order. If your creditor shoots up interest on your debt and refuses to take court action then applying for a time order is the only way to freeze the interest. If the court makes a time order and you keep up to date with payments, a creditor cannot apply to a county court.
It will not be shown as a judgment on the county court register or on credit reference agency files. This is applicable even if the creditor had reported the default on your credit file.
How to apply before court action
You have to fill up a claim form called N1 with supporting information known as “Particulars of Claim”. You also need to produce a personal budget sheet and details of your circumstances.
Application fee for Time Order is £150. If you are on a low income or on certain benefits, you may not have to pay the fee.
The creditor can object to your time order application in the court. There will be subsequent hearing where the district judge decides whether to make a time order in your case or not.
How to apply after court action
You need to fill up N244 if your creditor takes you to court. You need to pay £65 as fee unless you have some benefits. You also need a personal budget sheet and details of your circumstances. There will be subsequent hearing where the district judge decides whether to make a time order in your case or not.
In a situation where a creditor takes action against you in a county court elsewhere you can apply for the case to be transferred to your local county court.
2. Secured Loans
If your lender threatens to take possession of your home, time order can be the most effective way out.
How to apply for time order before court action
You have to fill up a claim form N440 and apply to a country court. You also need to fill in details of your income, expenditure and personal circumstances on a “schedule”. You will have to pay a fee of £150 with your application unless you have a benefit. A subsequent hearing will decide whether your application for a time order will be accepted or not. If the time order is refused the lender can initiate proceedings to repossess your home.
How to apply for time order after court action
If your lender makes a possession claim against you in your local county court you can apply for a time order. You will be sent a form (N5) by the court and need to fill in the defence form called N11M. Tick BOX 6 to ask the court to consider a time order and send this to the court with details of your defence, details of income, expenditure and circumstances. You can request for payments to be reduced or for the loan reschedule if necessary.
There will be a subsequent hearing where the creditor may object to your time order. The district judge may decide to make a time order, suspend possession and allow you to stay in your home as long as you pay back the loan. They can also refuse your application and give a repossession order. If you already have a possession order you can still make an application for a time order by using the general application form – N244.
Justified reasons to apply for a time order?
It is very important that your reason for the application is ‘fair’. The court looks into the matter from the perspective of both parties, (the creditor and you).
- How justified was your reason for taking a loan?
- Could you make payments on time in the beginning?
- Is your agreement very expensive or not appropriate to your requirement?
- Did you take any other loan subsequently? State reasons.
- Why are you not able to pay on time? (changed circumstances)
- Did you make a conscious effort to sort out the issue and ask the creditor for a payment arrangement? Mention whether the creditor has refused to negotiate.
- Is your situation temporary and likely to improve in the future? The court may want to make a time order for a time-limited period.
Starting a claim in the county court can sometimes be quite complex and has associated issues. Hence it is necessary that you take proper legal advice before you proceed.
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