A time order (or Judgment Instalment 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 is granted by the County Court and sets new repayment terms and possibly lower interest rates/charges for an agreement if the Court believes that the original terms should be altered.
A time order is particularly useful if you have a secured loan and your lender is threatening to repossess your home.
This can only be granted for loans, credit cards and overdrafts which are regulated by the Consumer Credit Act.
How does a Time Order Work?
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.
Advantages of using a time order:
- The agreement of the creditor is not required if the Court can be persuaded that an Order should be made.
- Any Possession Order will be suspended by the Court on the terms of the time order.
- Once made, the creditor can take no further action as long as payments are maintained.
- It can reduce interest rates/ charges and set payments at an affordable level.
Disadvantages of using a time order:
- Time orders are difficult to get and because they are still rarely applied for, for many Judges are not familiar with the principles. The Court is required to draw a distinction between a deserving and an undeserving client.
- The client will have to wait until the creditor issues an arrears notice or a default notice, or takes action before applying for a time order.
- Creditor’s costs may be added to the debt.
When can you apply for a time order?
When a default or calling in notice has been issued by the creditor. They will send these out if you have fallen behind with payments and once you have received this you can make an application to the County Court for a time order.
The procedure and forms you need depends upon whether you have a secured loan, hire purchase/ conditional sale agreement or an unsecured loan.
What should I ask for?
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 realistically afford to pay what you have offered.
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 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 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 onto the arrears is the same or more than the amount you can afford to pay towards clearing the arrears.