Time to Pays for Debt

Time to Pay Directions and Time to Pay Orders are court orders that debtors can apply for when their creditors take them to court for not paying a debt; or in the case of a Time to Pay Order, after a court order has been granted.

Time to Pays should not be confused with Time Orders which are regulated by the Consumer Credit Act 1974, as opposed to Time to Pay Directions and Orders which are regulated by the Debtors (Scotland) Act 1987.

What is a Time to Pay?

A Time to Pay is what you ask a judge for when a creditor takes you to court for non-payment of a debt and you don’t dispute you owe the money. The Sheriff can then decide whether you should be given more time.  If he thinks you should have, he can allow you to repay the debt by instalments; or he can give you time to pay it off with one lump sum.

Once a Time to Pay Direction or Order is granted, a court order (or decree) is still granted against you, but providing you comply with it, creditors cannot instruct a sheriff officer to serve on you a Charge for Payment or execute an earning or bank account arrestment. It also prevents a creditor raising a petition for your sequestration (bankruptcy), where they have already served on you a Charge for Payment and it has expired.

You should, therefore, think carefully before you apply for a Time to Pay Direction. Do you accept you owe the debt? If you don’t a Time to Pay Direction should not be applied for, as it is not a defence. Instead you should think about why you don’t owe the money and seek advice on whether this could be argued as a defence in front of a Sheriff.

What is the difference between a Time to Pay Direction and Time to Pay Order?

The difference between a Time to Pay Direction and a Time to Pay Order, is the first you apply for before the case is decided by the Sheriff; the latter only after a decree has been granted and Charge for Payment has been served.

If you have previously applied for a Time to Pay Direction, you cannot apply for a Time to Pay to Order.

You can only use the remedies once.

You cannot also apply for a Time Order under the Consumer Credit Act 1974, if you have previously used a Time to Pay Direction or Time to Pay Order.

How do you apply for a Time to Pay?

When applying for a Time to Pay Direction, you do this when the court action is raised, and you receive the court summons. The application form is included in the paper work that is sent to you.  You should complete this and return it to the court before the last date allowing you to make a response.

If you have not completed the application and returned the form by the correct date, the case will only call in front of the Sheriff if you have stated you want to defend the action. If you have, you can make the application when you or your representative appears in court on your behalf. You will, however, have to admit you owe the money, as this is a prerequisite to applying for a Time to Pay.

Where the court order has already been served on you, you can apply for a Time to Pay Order, if you have not already applied for a Time to Pay Direction. To do so, the person you owe money to, must first have served on you a Charge for Payment of Money.

It does not cost anything to apply for a Time to Pay, but you should seek advice, preferably from a money advice agency as there may be alternatives, such as the Debt Arrangement Scheme.

What types of debt can you apply for a Time to Pay for?

Time to Pays can be applied for most types of debts, providing they are under £25,000.

There are some exceptions, however.   These are debts that relate to

  • Income Tax, Car Tax, VAT;
  • Divorce settlements; and
  • Maintenance

What happens when you have made an application?

Once you have made an application for a Time to Pay (other than when you make the application at the court hearing), the Sheriff Clerk will send a copy of your application to the person who you owe money to.

They then get the opportunity to agree to your application, or if they don’t agree, they can intimate their objection to the court and a court date is set for your application to be heard by the Sheriff.

What does the Sheriff consider when deciding an application?

Sheriff’s will consider several factors when deciding a Time to Pay application, primary amongst being whether it is reasonable. This can include how much you can afford to pay, but also how long it will take for the debt to be repaid. It can also include other factors, such as periods of illness, recent bereavements, and other personal circumstances.

There is no fixed rule as to how long it should take to repay the debt, but as a rule of thumbs, sheriffs normally expect the debt to be repaid within 24 months, but they can allow longer.

If you need longer and have other debts, you may be better thinking about the Debt Arrangement Scheme.

What effect does a Time to Pay have?

The effect of a Time to Pay is it protects you from the creditor executing diligence against you. This means they cannot serve a Charge for Payment, arrest your earnings, execute a bank arrestment, or attach property.

They also cannot raise a petition for your sequestration.

However, they can still apply the judicial rate of interest to your debt, which is currently 8% per year. This is another reason you may wish to consider if the Debt Arrangement Scheme would be more appropriate, as this can stop interest, fees, charges, and penalties being applied to your debt.

What happens if you stop paying or fail to comply with the Time to Pay?

If you agree to pay by instalments and miss a payment, nothing happens immediately. However, if you miss a payment and there already a sum outstanding equal to two missed instalments, the Time to Pay lapses.

Where you agreed to pay by lump sum and fail to pay within 24 hours of the day specified, the Time to Pay lapses.

Where you have had a Time to Pay granted and you do not think you can make the payment that is due, then rather than just miss the payment, you can apply to the court for a variation of the order. If the Sheriff accepts the variation would be reasonable, he may make the variation.

Should you apply for Time to Pay for rent arrears?

Generally, when an action is raised to for rent arrears, it is normally also raised to evict you, if you are still living in the property. If this is the case, it is not advisable to apply for a Time to Pay, as by consenting to decree, you also may be admitting it is reasonable to evict you.

Instead you should seek specialist housing advice by contacting your local authority money advice agency, law centre, Citizen Advice Bureau or Shelter.

Readers Questions

  1. Helen

    I have received a FORM 05 which states formof citation where time to pay direction or time order may be applied for. However the amount stated (for solicitor fees) is not accurate and I have previously complained to the solicitors to ask for an independent assessment of fees. However, now I have 21 days to apply for a time to pay direction or time order. I have been sent a Form 03. I don’t have the money to pay this except monthly payments but what are they likely to accept? The debt is 11k and I can probably only pay 150pm. I cannot afford to employ another solicitor to defend the action on the basis the amount sought is not accurate. If I get the monthly instalments how will this affect my credit file?

    1. Scottish Adviser Post author

      Hi Helen

      I would recommend contacting your local advice agency for further advice. Time to Pay Directions can be useful, however, they have a number of draw backs.
      One is Sheriffs tend to be of the view they should only be for limited periods of time, like 18-24 months. This isn’t set in stone and it is at their discretion, but it’s a useful guide. This would mean the amount your offering is not likely to be sufficient.
      Also Court Orders normally include judicial interest of 8% per annum, so on a £11k debt that is about £880 per year. It will go down as you pay down the debt, but for the first few years, will still be significant. So it means its not a simple case of £11,000 divided by £150 = 74 months. It will take longer.
      Also in addition to that, if you accrue the equivalent of 2 months arrears the Time to Pay Direction gets cancelled and you can have legal debt recovery action taken against you.
      Another option might be the Debt Arrangement Scheme, this freezes interest and charges,even judicial interest. It also cannot be revoked as quickly as a Time to Pay and the average duration for one is 7 years, so longer repayment periods are allowed.
      There may be other options also like Bankrutpcy, which without knowing your circumstances I cannot say whether that would be appropriate or not.
      However, if you contact your Local, free advice agency and ask to speak to a Money Adviser, they will help you explore all options, including Time to Pay Directions.
      See Here for your local advice agency

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