Time Orders are court orders that allow you more time to repay your debts, particularly debts owed under hire purchase agreements and PCP Plans (Personal Contracts Purchase). They importantly also allow you to keep the item that you purchased using the debt.
Time Orders, however, are governed by consumer credit law and should not be mixed up with Time to Pay Directions or Orders. These are different.
Time Orders can also only be used for certain types of debts, such as:
- store cards;
- credit cards;
- personal loans (including secured loans, but not credit union loans); and
- hire purchase agreements (conditional sale and PCP plans are types of hire purchase agreements).
Why should you use a Time Order?
Time Orders should only be used when you have entered into a consumer credit agreement for any of the above types of debts and have fallen into arrears. The idea is that if this happens and an arrears notice, or default notice has been served on you, you can ask the court to give you more time to repay the debt.
Where you have used the credit that you have taken out to buy a car or a TV, one of the benefits of a Time Order, is this allows you to keep possession of the car and TV, whilst you repay the debt. This is unlike what happens when you apply for a Time to Pay Direction, as this just gives you time to repay the debt but does not allow you to keep the item you have purchased.
However, Time Orders can be complex, so advice should always be sought before applying for one. They are also not often used in Scottish Courts, so it’s common when you apply for one, for the court staff and the other party’s solicitors to think you are applying for a Time to Pay Direction.
When do you apply for a Time Order?
There are two procedures for applying for a Time Order. The first of these is when you are served an arrears notice under the Consumer Credit Act 1974. This is before your lender takes you to court. If you apply at this stage, you will have to complete the form, submit the application to the court and incur the cost of having it served on the other party. This is known as a standalone application.
The other procedure is when your creditor takes you to court. When you receive the summons from the court, it will be accompanied by court paperwork which will ask you if you want to apply for a Time Order/ Time to Pay Direction.
The advantages of applying at this stage is there should be no cost for you, as you only need to complete the paperwork and return it to the court.
Whatever, procedure you use, the lender (Pursuer) will inform you and the court whether or not they are happy to accept your application. If they are, the court will notify you and you will need to begin making payments. If they are not, the court will set a hearing date where you or your representative will have to attend and make representations as to why your application should be accepted.
The disadvantage of applying at this stage is if you are unsuccessful, the court will grant the court order against you, and where the agreement relates to a hire-purchase, conditional sale or PCP agreement, will also usually make a possession order for the item to be returned to the lender.
If you fail to return the item, the lender can instruct Sheriff Officers to repossess the item, which will include the power to enter you home to remove it if necessary.
What does the court consider when you make a Time Order application?
When you apply for a Time Order the court will consider whether your application is “just”, having both regards to your and the creditors’ interests.
Normally, the court will look at your income and expenditure, which you need to complete when you make the application. This shows how much money you have coming in and going out and what you have left to pay your debt. This is intended to see what you can pay towards your debts.
They will also look at how long the original agreement was for, what level of arrears you have and how much you are offering to pay. If you took a hire purchase agreement out five years ago, for example, and are three years into the agreement, then the court will want to see if you can repay the agreement off within the original term: so that it ends when it was supposed to.
This means they would normally be wanting to see if you can make the normal monthly contractual payment, plus an additional monthly amount towards the arrears, so that it completes by the end of the remaining two years.
However, the court does have wide powers, so it can extend the agreement, so it lasts longer and allow you to make smaller payments. However, the longer it takes to pay off the agreement, the less likely the court will be to grant the order.
It may support your application to explain to the court why you got into arrears and also why it is important your application is successful: you need the car to get to your place of employment for example.
What else can Time Orders do?
When applying for a Time Order, you can also request what is known as an ancillary order to reduce the level of interest you are paying. This may mean you can pay the loan off sooner. However, courts are usually reluctant to use these powers and it would probably be necessary to show the level of interest you are paying is unfair. This is likely to be very difficult, as the court may find, where you had a poor credit rating, even if the interest rate is high, it was justified because you posed a high risk to the lender.
It is also unlikely the court will reduce interest rates just to make an agreement that is unaffordable one that is affordable.
Time Orders are powerful tools, but rarely used and complex, so it is always best to seek advice before applying.