Time Orders

MCBIRNIE25

Hi guys, whiile be busy this week, i came across the following which i thought may be useful to some people. I didn't know about time orders.

WHAT IS A TIME ORDER?
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. It 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.
INFORMATION
You can apply for a time order if your credit agreement is regulated by the Consumer Credit Act 1974.
This covers credit agreements that were originally up to £15,000 if you took the loan out before 1 May 1998.
If you took out the loan after 1 May 1998 then the loan can be up to £25,000 and still be covered by the Consumer Credit Act.
Bank and buildings 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 that says: Consumer Credit Agreement Regulated by the Consumer Credit Act 1974.

WHEN CAN YOU APPLY FOR A TIME ORDER?
1) 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 and call in the loan if you have fallen behind with payments. Once you have received this, you can make an application to the county court for a time order. 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. See the sections below for details of how to apply.

There will usually be a fee to pay with your application. If you are on a low income or certain benefits you may not have to pay the fee.

2) When court action has been taken.

If a creditor has already started court action against you then you can still apply for a time order. The procedure and forms you need to use depend upon whether you have a secured loan, a hire purchase/conditional sale agreement or unsecured loan.
INFORMATION
See the sections below for details of how to apply and whether there are any fees to pay for the application.

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 need to ask for a time order to be made. If a creditor has already taken court action, then you should apply to pay the judgment at a rate you can afford. The court should look at making an order for you to pay in instalments you can afford. Interest is normally frozen automatically on court judgments or agreements under the Consumer Credit Act.

INFORMATION
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 to 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 the payments, a creditor cannot apply for a county court judgment to be made.

This means a judgment will not appear on the Register of Judgments, Orders and Fines or on credit reference agency files, although the creditor may have registered the default on your credit reference file already when you fell behind with the loan.

1) How to apply before court action
You need a claim form called an N1 which you have to fill in with supporting information called the 'particulars of claim' You also need a full personal budget sheet and details of your circumstances. This should be taken to your local county court.

INFORMATION
There will be a fee of £150 to pay with your application. If you are on a low income or certain benefits you may not have to pay the fee.

The creditor can put in a defence to the court objecting to your time order application. There will be a hearing and the district judge will decide whether to make a time order in your case.

2) How to apply after court action
You can apply for a time order after your creditor has taken you to court by using a general court application form called an N244. There will be a fee of £65 to pay with your application unless you do not have to pay the fee.

INFORMATION
There is an example application form N244 at the end of this fact sheet.

You need to include full details of your circumstances and a full personal budget sheet with the application. There will be a hearing where the creditor can object to the time order being made. The district judge will decide whether to make a time order in your case.

If the creditor started action against you in the county court elsewhere you may need to apply for the case to be transferred to your local county court.

WARNING
Some creditors say they can charge interest before and after judgment even though the court usually stops interest automatically on a Consumer Credit Act regulated agreement. It may be possible to ask the court to make a time order in this situation to stop or reduce the interest. This is a complicated area, phone us for advice.

FACT SHEET
We have a fact sheet on 'Interest on a consumer credit judgment', which may be of assistance to you. Phone us for a copy.
Hire Purchase/Conditional Sale agreement

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 the reduced amount without stating they are making a time order.

1) How to apply before court action.
If the creditor has issued a default notice on a hire purchase/conditional sale agreement then you can apply to the county court for a time order. The court can look at changing the terms of the whole agreement, not just the arrears, even if the whole loan has not been called in.

ADVICE
For details of the application process, see the section on 'unsecured credit'. Phone us for advice.

2) How to apply after court action.
If your creditor goes for a 'return of goods order' they will send you a claim form called an N1. You can fill in the reply form called an N9C which comes with the application. Ask for the return order to be suspended (so that you keep the goods) on the condition that you pay a fixed amount on top to clear the arrears.

You can ask the court to agree that you pay less than the full monthly instalments if that is all you can afford. Your offer will need to be 'reasonable' rather than a token payment if you want to get a time order. If the creditor accepts the offer there does not have to be a hearing for this to happen.

If the court agrees then you will get a return order that is not enforceable as long as you pay off the instalments set by the court. This is actually a time order although it may not be clear that this is the case.

ADVICE
If you have been sent a return order you can still apply for a time order to made using an N244. For details of the application process, see the section on 'unsecured credit'. Phone us for advice.

FACT SHEET
We have a fact sheet on 'How to deal with hire purchase debt' which may be of assistance to you. Phone us for a copy.
Secured Loans

A time order is most useful for this type of credit. You may use it to reschedule a loan secured on your home in order to prevent repossession of your home.

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.

1) How to apply before court action.
You may be able to use a time order to reschedule the payments on a loan secured on your home in order to stop repossession action. You can apply for a time order once the creditor has sent a default notice and called in the loan because you have fallen behind with the payments. You need to apply to your local county court using a court form called an N440.

INFORMATION
You can see an example application at the end of the fact sheet.

You also need to fill in the details of your income and outgoings and personal circumstances on a 'schedule'.

INFORMATION
An example of this schedule is at the end of the fact sheet.

INFORMATION
There will be a fee of £150 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 fact sheet.

There will be a hearing where your lender can object to a time order being made. It is up to the district judge to make a time order or refuse your application. If the time order is refused the lender could start possession proceedings to try to repossess your home.

2) How to apply after court action.
You can apply for a time order when your lender makes a possession claim against you in your local county court. You will be sent a form N5 by the court and need to fill in the defence form called an N11M. Tick Box 6 to ask the court to consider a time order and send this to the court with full details of your defence, details of income and outgoings and personal circumstances. You can ask for the payments to be reduced and for the loan to be rescheduled if necessary.

INFORMATION
See the section 'What should you ask for?'

WARNING
Putting in a defence is very complicated. Phone us for advice.

REMEMBER
There are no fees to pay with this application as you are just replying to a court claim (fees are added to the possession claim by your lender instead).

There will usually be a hearing where the lender can object to a time order being made. The district judge may decide to make a time order, suspend possession and allow you to stay in your home as long as you make the payments ordered. They can also refuse your application and make an outright possession order.

If you already have a possession order you can still make an application for a time order. You need to use the general application form N244.

INFORMATION
See the section on 'Unsecured credit' for details of the application process.
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HAS THE WHOLE LOAN BEEN CALLED IN?

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 amount of 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 payments 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.

INFORMATION
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 do so, and it is needed to make the time order work.

As part of the case of Southern & District Finance plc 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 only give a time order for a limited period. You may have to ask for any exceptional circumstances to be taken into account to allow you to have a time order over a longer period. Argue that under the case 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 circumstances'.

ADVICE
Anything you can say to show your situation is through no fault of your own will help when applying for a time order as the court will look at your payment record, show how you got into debt and why you took the loan out.
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WHAT SHOULD YOU ASK FOR?

* If you cannot afford the full instalment you need to ask for the loan and arrears to be rescheduled.
* 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 afford.
* The court has to look at the position of the creditor as well as your situation 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 to 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. Also, the interest may be so high that your reduced payments have no effect without reducing the interest. You will also need to ask for any default interest and charges to be frozen.
* If you can afford to make the normal monthly payments you need to ask for a time order to fix payments 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.

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IS IT "JUST" TO MAKE A TIME ORDER?

Make sure you add any points that may help the court decide that your case is 'just'.

REMEMBER
The court needs to look at the creditor's position as well as your circumstances.

* Was the reason you took out the credit a good one?
* Could you afford the payments when you first took out the agreement?
* Is your agreement very expensive or not appropriate for your needs at the time? Point out a high interest rate and how much you would have to pay back over the whole period.
* Have you taken out further credit since? If so, was there a good reason for this?
* Have you had a good payment record until the point you stopped paying?
* What is the reason for your non-payment? Have your circumstances changed? Explain the background to your situation.
* Have you tried to sort out your problems and ask the creditor for a payment arrangement (e.g. you haven't ignored the debt)? If the creditor has refused to negotiate you need to point this out. Start making the payments you have offered as a gesture of goodwill.
* Is your situation temporary and likely to improve in the future? The court is likely to want to make a time order for a time-limited period.

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COSTS

You need to be careful with time order applications in relation to secured loan agreements. The secured lender is usually allowed to add possession costs and charges to the outstanding balance you owe on your loan.

If your time order is refused you may have lots of extra costs added to your debt. This will usually happen automatically. If there is a good reason that you feel the costs are unfair, you can ask the court to refuse the lender's costs. This might be if the creditor has been 'unreasonable' in some way.
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EXTORTIONATE CREDIT

If you feel the interest rate charged on your agreement is excessively high, you could challenge the agreement using the 'extortionate credit' section of the Consumer Credit Act as well as applying for a time order. It is very difficult to persuade the courts that the interest rate on a particular loan counts as 'extortionate'. Phone us for advice.

ADVICE
If you think a time order may help your situation it is usually best to seek help from a local advice agency.