The Definition of a Time Order

A person who has fallen behind with payments can ask the court to extend the deadline for paying a loan agreement by submitting a time order. With the help of a time order you can extend the duration of the loan and decrease the amount that you need to pay each month. Even better, some time orders may allow you to change the interest rate.

If you have a secured loan, you can stop your lender from repossessing your home by using a time order.

As long as your credit agreement follows the Consumer Credit Act 1974, you can apply for a time order. For loans that were taken out BEFORE May 1, 1998, the credit agreement should not be higher than £15,000.

If the loan was taken out AFTER May 1, 1998, however, the value of the credit agreement covered by the Consumer Credit Act can reach £25,000.

Unfortunately, the Consumer Credit Act does not cover the bank and building society mortgages that were used to buy your home. You should check your loan agreement in order to find out if it is included in the Consumer Credit Act. This heading should be found on your loan agreement: CONSUMER CREDIT AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974.

WHEN TO APPLY FOR A TIME ORDER?

1,) You can apply for a time order if your lender has issued you a "Default Notice" or "Calling in Notice" or "Termination Notice".

Once you have fallen behind your payments, you lenders can send you a default or termination notice. They can also call in the loan. Upon receiving any of these forms of notification from your lender, you can start filing an application for a time order to the country court. The forms that you need to submit as well as the procedures that you need to follow are dictated by the type of loan that you have taken. It can be a secured loan, a hire purchase / conditional agreement or an unsecured loan. You can take a look at the sections below to know how to apply for a time order.

You may need to pay a fee when you submit your application. If you can prove that you have a low income or are receiving certain benefits, paying for the fee is no longer necessary.

2.) You can also ask for a time order when a court action has been taken.

Even though the creditor has already filed some charges against you, filing for a time order can still be one of your options. The forms that you need to submit as well as the procedures that you need to follow are dictated by the type of loan that you have taken. It can be a secured loan, a hire purchase / conditional agreement or an unsecured loan. You can take a look at the sections below to know how to apply for a time order. Below you will find out more details on applying for a time order as well as the fees that you may need to pay.

THE TYPE OF DEBT THAT YOU CAN HAVE A TIME ORDER ON

Unsecured credit

Most of the time, having an ordinary credit agreement or an unsecured loan / second mortgage does not merit a time order.

You only need to apply for a time order in order to pay the judgment at a rate that you can afford once the creditor has taken a court action.

According to the Consumer Credit Act, the court should be able to make an order that would allow you to pay in affordable installments. The interest on court judgments for agreements should also be frozen automatically.

If your creditor has issued a default notice but does not accept your offer of payment or has no intentions of freezing your interest, you should think about filing for a time order. A time order maybe the only way to have your interest frozen if your lender does not want to take a court action and your interest keeps on increasing. With a time order from the court, your creditor will not have the right to apply for a county court judgment to be made as long as you pay your dues on time.

This means that you do not have to worry about finding a judgment on the county court register or on any credit reference agency files unless your lender has already registered the default on your credit file when you started falling behind with your payments.

1.) Applying for Court Action

You should first fill out a claim form called N1. It should come with a supporting information called the "Particulars of Claim". Your full personal budget sheet as well as an account of your situation should also be attached. All these documents should then be taken to the local county court.

Unless you are on a low income or you are on certain benefits, you will need to pay a fee of £150 in order to process your application.

While your application for time order is being processed, your lender can object to it by filing a defence to the court. When this happens, a hearing will be set and the district judge will decide whether he should make you a time order or not.

You should be warned that filing a claim in the county court can be very complicated.

2.) Applying After Court Action

If your lender has already filed a case in court, you should apply for a time order by filling up a general court application called the N244. You may need to pay £60 unless you are exempted from paying this fee. A detailed description of your present situation as well as your personal budget sheet should be attached to the application. After that, a hearing will be set in order to give the creditor a chance to object to the processing of the time order. Again, the district judge will make the decision to grant you the time order or not.

If the action against you has been filed in another county court by your creditor, you may need to apply for the relocation of this action to your local county court.

Creditors who charge interest after judgment.

Some lenders tend to insist on charging interest before or after judgment even though the interest is usually automatically frozen by the court as indicated in the consumer credit act. If such a situation arises, you can ask the court to make a time order in order to freeze or decrease the interest. Unfortunately, this can make things very complicated for you.

Hire Purchase / Conditional Sale Agreement

Some creditors go to court in order to file a "Return of Goods Order". When this happens, you can request the court to suspend this by agreeing to pay a fixed amount every month. The amount will include a monthly installment plus an additional amount that will clear your debt. If cannot afford to pay the monthly amount being asked of you, you can always ask the court for a time order. A court order that will allow you to keep the hire purchase/conditional sale goods and pay off the agreement at a lesser amount will be made without telling the other party about your time order.

1.) Applying before court action.

Once the creditor issues a default notice on a hire purchase/conditional sale agreement, you can start applying for a time order to the county court. The court will then look into adjusting the terms of the whole agreement, not just the debts, even though the whole loan has not been called in. If you need more details on the application process, take a look at the section on "unsecured credit".

2.) Applying after court action

If your lender files a "return of goods order" in court, you will be sent a claim form called N1. This application form will come with a reply form, called N9C, which you need to fill up. By asking the court to suspend the return order and agreeing to pay the fixed amount that would clear your debts, you can keep your goods.

If you can't pay the full monthly installment, you can ask the court to lessen this amount. Of course, your offer should be "reasonable" unless a token payment is all you can afford. If that's the case, you should get a time order. If the offer is accepted by the creditor, a hearing is not needed in order for this to happen.

Before you could get a return order than cannot be implemented as long as you are up to date with your payments, the court should approve it first. Although this can also be considered a time order, it would not be made clear that this is the case.

You can also apply for a time order by filling up the N244 form if you have been sent a return order.

Secured Loans

A time order is the best solution for this type of credit. In order to prevent repossession of your home, you can apply for a time order in order to reschedule the loan that is secured on your home.

You can request for a time order right after the lender has issued a default notice or has filed a possession order in court.

1.) Applying before court action.

If you have a secured loan, applying for a time order may be the best solution for you. By applying for a time order, you can reschedule your payments for your secured loan and stop your creditors from taking a repossession action. The time order can be filed as soon as the creditor has issued a default notice and has called in the loan because of your delayed payments. You need to fill up a court form called N440 and submit it to your local county court.

You also need to make sure that it contains the details of your income as well as your outgoings and your personal circumstances on a "schedule".

A fee of £150 will be asked from you unless you are on a low income or on certain benefits.

You will then have a hearing wherein your lender can object to the processing of the time order. The judge will then decide whether to approve your time order or refuse it. And, if the judge refuses your time order, the lender would be able to start filing for possession proceedings in an attempt to repossess your home.

2.) Applying after court action.

Once your lender files a possession claim against you in your local county court, you can start applying for a time order. When you receive a form N5 from the court, you should fill out the defence form which is called N11M. You should remember to put a check on BOX 6 in order to request the court to give you a time order. After you have completed this form, send it to the court with full details of your defence, including a description of your income as well as your outgoings and personal circumstances.

You can also ask the court to reduce the payments and reschedule the loan if you find it necessary.

Filing for a defence can be a bit complicated.

You don't have to pay a fee when you submit this application since you are just replying to a court claim. These fees are already included in the possession claim filed by your lender.

You will then have a hearing wherein the lender would be given a chance to object to the time order that is being processed. The district judge will then decide whether he should approve your time order, suspend possession and allow you to return to your house with the condition that you pay your dues regularly or disapprove your application and give a possession order.

HOW WOULD YOU KNOW IF THE WHOLE LOAN HAS BEEN CALLED IN?

The law on the court's powers on approving a time order has never been clear. Using a recent Court of Appeal case as an example, we can see that time orders can be applied in these two situations:

There are times when the time order can only deal with debts. This means that the monthly payment will be left unchanged but the amount of interest being added to the debt can be decreased. This happens when only a default notice is issued by the lender. This is rarely the case because most agreements dictate that the whole loan should be called in automatically by default.

In some cases, the time order is used to change the whole agreement, allowing you to set a lower payment and interest rate. In some cases, the interest is frozen. This can only take effect when the lender has called in the whole loan and the whole loan agreement has been ended by default or once the possession proceedings have begun.

Following a decision in the Court of Appeal in March 1995, asking the court to make a time order has been made easier. This case can be referred to as the Southern & District Finance plc v Barnes. This is a very significant event because the whole amount of money stated in the agreement was covered in the time order.

The monthly interests and the interest rate on the loan agreement can be decreased as long as the court thinks it fits the situation and it can affect the success of the time order.

Based on the case of the Southern & District Finance v Barnes, the Court of Appeal stated that time orders are only applicable to people who are suffering from temporary financial difficulty. Showing that your case is unique or you are sure to have better circumstances in the future can help you win the case.

The time order given by the court can only be implemented for a limited period of time. In order to be allowed to have a time order that will last longer, you need to present exceptional circumstances to the court.

According to the Director General of Fair Trading v First National Bank case in 2001, approving a time order that would last for a long period of time is possible if it "seems just in all the circumstances".

Any document that proves that you were faultless in the events that led to your current situation will help when you apply for a time order since the court will go over your payment record, how you ended up in debt and why you applied for the loan.

WHAT SHOULD YOU ASK FOR?

If you feel that you cannot pay the full installment, you should ask the court to reschedule the loan and the debts.

In order to have your time order approved by the court, you should be ready to make an offer of payment. The court will then decide whether you can pay the amount that you have offered or not.

The court needs to consider the position of the creditor as well as your situation in making its decision to approve a time order. If you cannot afford to make an offer or if the court sees you as unable to pay off the loan, it can decide to refuse the time order.

You can ask the court to change the interest rate to allow you to have a new interest rate and repay the debt that you owe during the same period of time.

Another thing that should be considered is the interest. It may be so high that your reduced payments would not be able to reduce it. You may also have to ask the court to freeze the charges in order to allow you to repay the debt during a reasonable time. This can be very important if the interest that is being added to your debts is more than the amount you can pay towards clearing your debts.

IS IT "REASONABLE" TO MAKE A TIME ORDER?

Add as many points that may win the court over to your side as possible. Keep in mind that the court will equally consider your creditor's position and your circumstances.

Did you have a "good" reason to take out the credit?

Did you have the ability to pay off your payments when you first got the agreement?

Was your agreement too expensive or inappropriate for your needs during that period? Make a high interest rate your example and tell them how much you would need to repay over the whole loan period.

Did you have a good payment record before you had to stop paying?

Why did you stop making your payments? Has your situation changed? You should explain how this happened.

Next, you have to prove that you didn't ignore the debt. Have you done your best to sort out your problems with your creditor? You should tell the court if your creditor refused to negotiate with you. Commence making the payments you have offered as a sign of good will.

Do you think your situation will improve in the future? It's likely that the time order will be implemented for only a short period of time.

COSTS

When it comes to time order applications that are related to secured loan agreements, you should be careful. Your secured lender may be permitted to include the possession costs and charges to the outstanding balance you need to pay. In case the time order isn't approved, you will need to be prepared to pay the extra costs that will be added to your debt. Of course, if you feel that these charges are unfair, you can request the court to take out your lender's costs. This can only be done if the creditor has been "unjust" in some way.

EXTORTIONATE CREDIT

If the interest rate charged to your agreement is a bit too high, you may want to challenge the agreement by utilizing the "Extortionate Credit" section of the Consumer Credit Act while applying for a time order. You can persuade the courts that the interest rate on a certain loan may count as "extortionate". You should ask your local advice centre in order to know more about this.

If you are sure that getting a time order will help you get out of your situation, you can start asking for help from a local advice agency. Take note that this report only explains the functions of time orders and that the outcome of your proceeding will be dependent on your district's judge's opinion of your circumstances, and what the powers of the court are as stated in the Consumer Credit Act 1974.

TIME ORDER LEGISLATION

Consumer Credit Act 1974

Section 129 Extension of time

1) If it appears to the court just to do so:-
(a) on an application for an enforcement order: or
(b) on an application made by the debtor or hirer under this paragraph after service

on him of:-

(i) a default notice or

(ii) a notice under Section 76 (1) or 98 (1); or

(c) In an action brought by a creditor or owner to enforce a regulated agreement or any security, or recover possession of any goods or land to which a regulated agreement relates, the court may make an order under this section (a "time order").

2) A time order shall provide for one or both of the following, as the court considers just:
(a) the payment by the debtor or hirer or any surety of any sum owed under a regulated agreement, or a security by such installments, payable at such times, as the court, having regard to the means of the debtor or hirer and any surety, considers reasonable;
(b) the remedy by the debtor or hirer of any breach of a regulated agreement (other than the non-payment of money) within such period as the court may specify.

Section 136 (relating to power to vary agreements and securities)

The court may have the power to amend the agreement or security as a consequence of the term of the order.

COUNTRY COURT FEES

SHOULD I PAY FOR MY APPLICATION IN THE COUNTY COURT?

Usually, you will be asked to pay for a fee when you submit your application. There are circumstances, however, that can exempt you from paying this fee. By filling up the form called EX160, you can "apply for a fee exemption or remission." You should attach this to the main application form. If the court approves your application for exemption, the fee will be omitted. And, if you did pay for a fee when you should have been exempted from it or would have been qualified to remit it, then you can apply to the court for a refund within 6 months.

EXEMPTIONS

You can request the court to exempt you from paying the fee if you are on income support or your income is based on job seeker's allowance (JSA). You may need to submit some evidence that you are on this benefit. You can also be allowed not to pay the fee if you or your partner is on guarantee credit element of pension credit.

Working on tax credit will also allow you to be exempted from paying the fee if you are going through these circumstances:

If you are on child tax credit, or you receive the disability or severe disability element in your working tax credit, and in either case your gross annual income taken into account for working tax credit is £14,600 or less (from 31 August 2004).

In order to qualify, you should show the court your tax credit award notice.

In case you don't qualify for an exemption according to these rules, you may ask the court to remit or waive your fee. Check the information below.

REMISSIONS

You can ask the court to remit or waive the fee if it will cause you to have "undue financial hardship". You will need to fill out the same EX160 application form. You may have a low income or benefit that does not immediately exempt you from paying the fee. You should give as many details about your present circumstances as you can. You should write down the details of your financial situation as well as other exceptional circumstances that you may be experiencing. This way, the court would be able to remit the whole fee or just a part of it, depending on what they feel you can afford.