When can you use a Time Order?

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.

Comments

  1. Harry

    Hi Alan,

    I’ve a 2-year lease agreement with Audi. The agreement expires in September 2019, so I’ve five months left.

    I’ve been served with a default notice by Audi. I’ve called Audi and the repossession company (Grosvenor) and advised them that I can pay the arrears in full, they have refused my offer.

    I’ve not received any court paperwork from Audi/Grosvenor, they’ve simply asked to me arrange a time for them to collect the vehicle.

    Would you be able to give me some guidance on Time Orders please?

    1. Does Audi have to serve me with court papers, or can they repossess the car without my permission?

    2. If they have to serve, me with court papers should I wait and respond to that legal action?

    3. Or is it better for me to initiate a time order?

    4. What is the procedure for serving a time order?

    Thank you

    1. Scottish Adviser Post author

      Hi Harry

      Thank you. The first thing is I am presuming the default notice has expired, as otherwise they should not refuse you the right to remedy the default prior to the expiry of the notice period (14 days).

      If it has expired the next step for them is to terminate the agreement(the expiry of the notice period for the default notice gives them the right to do this – see s87 of the Consumer Credit Act 1974.)

      In terms of whether they can repossess the car without a Court Order, providing you have paid more than one third of the total amount owed under the agreement, they require a Court Order or your consent (s90 Consumer Credit Act 1974).

      It’s important to note it’s one third of the amount owed under the agreement, rather than one third of the instalments, as there may be an optional lump sum owed at the end that inflates the total amount owed under the agreement).

      However, there has always been a strong argument in Scots Law that regardless of the amount paid a Court Order may be required at all times, because Scots Law has always frowned upon self help remedies.

      The argument is if the lender repossessed the car without one, the borrower can raise am action in the Sheriff Court to demand all payments made under the agreement to be repaid to the borrower.

      Ideally, you want to avoid this scenario, as there is no guarantee what position the court would take, but its useful to remember that Courts in Scotland do not like lenders using self-help remedies such as repossession with out a Court Order.

      It’s is likely this is more likely to the case where the vehicle is kept in a garage or in a driveway.

      In terms, of whether it’s worth you waiting for the lender to raise the court action or applying for it yourself, you can apply for it once you have a default notice served (see S129 of the Consumer Credit Act 1974).

      However, although you can submit the form yourself in what is called a stand alone action, you will need to ensure the lenders are notified via Sheriff Officers, after the application for a Time Order is applied for, so there is a cost for you.

      If you wait for them to raise the action, there is no cost, but if your looking to try and bring the agreement up to date with a Time Order, the longer they take to raise the action, the more the arrears may be that you will have to repay if you get the Time Order.

      The Court Order that contains the form for making a standalone Time Order application is in these Court Rules (Act of Sederunt (Consumer Credit Act 1974) 1985 (Amendment) 1995).

      The argument I have been making to Sheriff’s in recent car finance cases I have recently represented in (and there is not a huge amount of definitive case law), is:

      1) Time Orders can be made for the arrears only or the full debt, but consumers can apply for one to just pay off the arrears whilst the Consumer continues to pay the normal contractual payments (so offer is normal monthly contractual payment plus instalment towards the arrears or a lump sum payment to the arrears).

      2) The effect of a Time Order when complied with is it can allow the Consumer to remedy the circumstances that led to the default (i.e. pay off the arrears).

      3) The effect of the Time Order is it varies the terms of the agreement and allows for a Court supervised repayment plan.

      4) If the default is remedied, i.e. the arrears are paid, the effect is the termination is reversed and both parties are returned to the position they were in prior to the default and the borrower can exercise their right to voluntary termination under s99 of the Consumer Credit Act 1974 and rely on s100 of the CCA Act 1974 which lmitis their liability providing half of the total amount owed under the agreement is paid.

      As I say I have had some success with this argument and most lenders have agreed to a negotiated settlement on this basis, without the Court having to say definitively what the law is, but the Sheriff have been so far very sympathetic.

      If you need help with this, I would advise contacting your local Citizen Advice Bureau or Law Centre or Local Authority Money Advice Agency.

      1. Scottish Adviser Post author

        I would add Harry that the argument above is for Hire-Purchase agreements, Conditional Sale agreements and PCP agreements (which are in effect HP agreements).

        1. Harry

          Hi Alan,

          Thank you for this.

          I purchased the vehicle under a 24 month, contract hire agreement.

          So it’s a Hire Agreement regulated by the Consumer Credit Act 1974.

          Does that change the advice you’ve given me?

          1. Scottish Adviser Post author

            Hi Harry

            The fact it is a hire agreement and not a hire purchase agreement does affect things.

            First the default notice must still have been served under S87 of the Consumer Credit Act 1974. So that remains the same.

            You can also still apply for a Time Order under S129 of the Consumer Credit Act 1974, as Time Orders can be applied for in relation to any regulated agreement, by a debtor or hirer.

            s90 that I quoted above about re-taking of goods does not apply to hire agreements, as it only relates to hire-purchase agreements.

            However, have a look at s132 of the Consumer Credit Act 1974 (Financial Relief for Hirer). It states quite clearly that if the item is taken back without a court order, you can apply for a court order for any part or all the payments that have been made under the agreement and also that any future liability can be limited.

            You do not say whether you want to see out the agreement or not to it’s conclusion, and I have not seen the agreement, so I don’t know if you have any early rights of termination, or whether you have to see out the 2 year agreement in full.

            However, the section 99 and 100 I mentioned above about terminating hire-purchase agreements does only relate to hire-purchase agreements.

            So I would suggest maybe contacting Grosvenor and making it clear to them that you don’t agree to the voluntary surrender of the vehicle and that if they attempt to repossess it without a court order you will apply for an order under s132 and seek compensation.

            I would then possibly contact the firm and see if they are willing to reach an agreement with you regarding the arrears , presuming you want to keep the car. If they don’t your options are

            a) do nothing and wait for them to take court action, at which point you could apply for a Time Order; and
            b) apply for a standalone Time Order yourself now, but there will be costs for you;

            If you are intending to keep the car, lets hope the firm takes a sensible approach and allows you repay the arrears. I don’t think any court is likely to be impressed with them raising a court action, and you turning up applying for a Time Order saying you will pay the arrears in full and had previously offered this and were refused.

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