Time orders on hire purchase

Use this fact sheet to:

• understand your options if your creditor is trying to take back your goods after you have missed payments;

• help you to ask the court to agree to affordable monthly payments; and

• help you to ask the court to change the period over which you make payments.

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; and

• how long the agreement will last.

In some cases, the court can also make an order to change the interest rate.

A time order is particularly useful if you have a hire-purchase or conditional-sale agreement and your creditor is threatening to repossess your goods.

What credit agreements are covered?

You can apply for a time order if your credit agreement is regulated by the Consumer Credit Act 1974.  This depends on when you took out your agreement and how much you borrowed at the time.  Your loan will be regulated if you borrowed less than the following amounts.

• £15,000 if you took out your credit agreement before 1 May 1998.

• £25,000 if you took out your credit agreement between 1 May 1998 and 5 April 2008.

• There is no financial limit if you took out your credit agreement from 6 April 2008 (except for some loans taken out for business purposes).

What the agreement should say

If you have a hire-purchase or conditional-sale agreement, it should state whether it is covered by the Consumer Credit Act.   The agreement should have a heading that says either: HIRE PURCHASE AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974 or CONDITIONAL SALE AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974.

For more information about hire purchase and conditional sale agreements, see our Hire purchase debt fact sheet.

Why apply for a time order?

You may be able to use a time order to reschedule the payments on your agreement.  A time order and an order to change the interest rate may be a good option if you have fallen behind with your payments.  You may be able to stop the creditor repossessing your goods.

A time order application on a regulated hire-purchase or on a regulated conditional-sale agreement always deals with the full amount owing on the agreement, not just the arrears. There are different rules for other kinds of agreement.

When can you apply for a time order?

There are three different situations when you can apply for a time order.

• When an ‘arrears notice’ has been issued.

• When a ‘default notice’, or a ‘termination notice’ has been issued.

• When court action has been taken.  

There can be a fee to pay when you apply for a time order, see Applying before court action for more details.

1. When an ‘arrears notice’ has been issued by your creditor

Your creditor must send you an arrears notice if you have missed two payments and owe at least that amount on your agreement.  If the payment is made weekly, your creditor must send the arrears notice if you have missed four payments and owe at least this amount on your agreement.  They must give you this notice within 14 days of this happening.  It should tell you:

• how much you owe under the agreement;

• how much the arrears are; and 

• if any interest or charges are being added.

You can apply for a time order after you get an arrears notice.  You must write to your creditor and give them 14 days' notice that you are going to apply for a time order.  In your letter you must include details of the offer of payment you are going to make in your application. 

2. When a ‘default notice’ or ‘termination notice’ has been issued by your creditor

Your creditor can issue a default notice or a termination notice to tell you to repay 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.  You don’t need to write to your creditor to give notice that you are going to apply at this stage. 

3. When court action has been taken

If a creditor has already started court action against you, you can still apply for a time order.  

Applying for a time order before court action

If the creditor has issued an arrears notice, or a default notice, on a hire-purchase or 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 creditor has not asked for repayment of the whole loan.

To apply for a time order, you need a claim form called an N440, which you have to fill in with supporting information called the ‘particulars of claim’.  You also need a detailed budget and details of your circumstances. Use My Budget to work out what payments you can afford to make. The form should be taken to your local county court.

Your 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.

Starting a claim in the County Court is complicated so contact us for advice.

There is a fee to pay when you apply for a time order before court action.  Depending on your circumstances, you may not have to pay it. See Do I have to pay a court fee? at the end of this fact sheet or contact us for advice.

If you have paid at least one third of the total amount payable on your agreement, your creditor will need to get a court order to repossess the goods. If your creditor applies to court to do this, you can ask the court to make a time order at that point instead. There is no fee if you apply in your response to the claim, so you would usually be better waiting for this to happen rather than applying on a N440. See the following section, Applying for a time order during court action.

Applying for a time order during court action

You can apply for a time order if your creditor has started court action to recover hire-purchase or conditional-sale goods. 

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 to clear the arrears.  If the court agrees to your request, the effect will be the same as if they had made a time order.

Filling in the form

Fill in the ‘admission’ form N9C, which comes with the claim form.  In Part B, make your offer of payment at a rate that you can afford, where it states: ‘I offer to pay by instalments of £’.  You need to make a reasonable offer, if your request  for a suspended order is going to succeed.

The witness statement

You should include a ‘witness statement’ with your N9C.  You may find the Sample witness statement later on in this fact sheet helpful.  The witness statement should include:

• a request that the court makes a suspended return order under section 135 of the Consumer Credit Act 1974, or alternatively a time order under section 129 of the Consumer Credit Act 1974, and freezes interest and charges under section 136 of the Consumer Credit Act 1974;

• your offer of payment from Part B;

• a copy of your budget;

• a statement of your personal circumstances;

• an explanation of why you got behind with payments; and 

• any information that will help to explain why it is right for the court to agree to your request. 

Send the completed form, your witness statement and any supporting paperwork to the court within 14 days.

If the court agrees then you will get either:

• a return order that is not enforceable, as long as you pay off the instalments set by the court; or 

• a time order. 

Applying for a time order after court action

If you have been sent a return order, you can still apply for a time order to be made using an N244 form.

There is a fee to pay when you apply for a time order after court action.  Depending on your circumstances, you may not have to pay it.  See Do I have to pay a court fee? at the end of this fact sheet or contact us for advice.

Filling in the form

In Part 3 of the form you should state that you are asking the court:

• to grant a suspended return order under section 135 of the Consumer Credit Act 1974, or a time order under section 129 of the Consumer Credit Act 1974;

• to freeze interest and charges under section 136 of the Consumer Credit Act 1974;

• to consider the reasons why you cannot afford to pay the contractual instalment; and

• to transfer the case to your local court, if appropriate.

In the box for information in Part 10, state:

• your offer of payment;

• that you are attaching a copy of your budget;

• a statement of your personal circumstances;

• an explanation why you got behind with your payments;

• your request for the case to be transferred to your local court, if necessary;

• an explanation of why it is not possible for you to get to the other court, if appropriate;

• that you are attaching a copy of your N9C; and 

• any information that will help to explain why it is right for the court to agree to your request.

Use  My Budget to work out what payments you can afford to offer.  Make sure that you attach a copy of your budget to the N244 form.

Send your N244 and your N9C to the court.  Keep a copy of all the forms that you send to the court.  Send a copy of your N244, your N9C and any additional paperwork with a covering letter to your creditor.

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.

Time order made by the court

A judge can make a time order on a debt regulated by the Consumer Credit Act 1974 because it seems the right thing to do.  They can choose to do this:

• when a creditor has applied to the court for an order to enforce an agreement; or

• where the creditor has started court action.

The judge does not have to have received a request to make a time order.  However, you can ask the judge to think about making a time order in these situations by writing a letter to the court. You may be able to contact the court by email instead of sending a letter. Contact the court for advice.

There is no fee to pay to write this kind of request.  You should:

• ask the court to make a time order ‘on its own initiative’ under section 129 (1) of the Consumer Credit Act 1974;

• ask the court to freeze interest under section 136 of the Consumer Credit Act 1974;

• include a witness statement; and 

• a detailed budget.

You may find the Sample witness statement later on in this fact sheet helpful.  

Use My Budget to work out what payments you can afford to make. If you do not have access to the internet, contact us to get a copy.

Check with your local court about how they might respond to such a request, or contact your local money advice agency to see if they can help you to make your request.

Do you have to be in temporary financial difficulties?

In 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.  The court has not been clear about how to decide whether your difficulties are temporary or not.  The court may only give a time order for a limited period.  You may have to ask for any exceptional circumstances to be taken into account, or show that there is a good chance of your financial situation improving, for you to get a time order over a longer period.

However, in Director General of Fair Trading v First National Bank, the court looked at whether you need to be in temporary financial difficulties to have a time order. They said that section 129 of the Consumer Credit Act 1974 allows the court ‘to make such order as seems just to it in all the circumstances’.

• Argue that in your case it is reasonable for the court to make a time order over a longer period.

• Make sure the court takes all your circumstances into account.

• Explain how your financial circumstances are likely to improve, even if this is some years away.

• Point out that in the Barnes case, one of the time orders was made over 15 years and that was considered ‘just’.

Reducing interest

In the case Southern & District Finance plc v Barnes, the court also agreed that the monthly instalments and the interest rate on the loan agreement can be reduced, if the court thinks it is just to do so and it is needed to make the time order work.

Is it ‘just’ to make a time order?

The court needs to look at your creditor’s position as well as your circumstances. Make sure you add any points that may help the court decide that your case is ‘just’.

• Was the reason you took out the credit a good one?  For example, did you buy a vehicle so that you could get to work and would it be difficult to keep your job without it?

• Could you afford the payments when you first took out the agreement?

• Is your agreement very expensive?  Point out if the interest rate is high compared to other similar agreements, and how much this means you would have to pay back over the whole period of the agreement.

• 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 that 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 asked the creditor for a payment arrangement to show that you haven’t ignored the debt?  If the creditor has refused to negotiate, you need to point this out.  Start making the payments that you have offered to show 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 only.

Costs

If your time order application is refused, you may have a large amount of extra cost added to your debt.  If you feel that the costs are unfair, ask the court not to add them to your debt.  This only happens if the creditor has been unreasonable in some way.  Contact us for advice.

Unfair relationships test

A time order allows the court to change the terms of the agreement, so that it is easier to pay what you owe.  The Consumer Credit Act 2006 introduced a new option, called the ‘unfair relationships’ test.  This allows the court to look not only at the terms of the agreement, but also the behaviour of the creditor, to see if the relationship has been unfair to the borrower.  The court has wide powers to alter terms of the agreement, or even to order the creditor to pay money back to you.

There is a fee to pay when you put in a claim for unfair relationship. Depending on your circumstances, you may not have to pay it. See Do I have to pay a court fee? at the end of this fact sheet.

If you feel the interest rate charged on your agreement is excessively high, or that the terms and conditions of the agreement are unfair, you may be able to take action against your creditor.  This may also apply if your creditor has behaved unfairly in the way in which they have dealt with your agreement.  It will be up to the creditor to prove that the agreement is not unfair.

You may be able to use the ‘unfair relationships’ test.  This applies to all agreements from April 2008, even if they are not regulated under the Consumer Credit Act (apart from a first mortgage). It doesn’t matter when your agreement was first taken out.  You can apply before your creditor takes you to court.  You can also ask for the court to look at this issue as part of an existing court case.

Although the Office of Fair Trading (OFT) has closed, its website still provides information about unfair relationships and examples of cases which you may find useful.  The Financial Conduct Authority (FCA), which replaced the OFT as the regulator, instructs companies to uphold key related Principles in their dealings with customers.

• A firm must conduct its business with integrity.

• A firm must observe proper standards of market conduct.

• A firm must pay due regard to the interests of its customers and treat them fairly.

• A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.

• A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.

• A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.

Sample witness statement

IN THE ANY TOWN COUNTY COURT

CLAIM NUMBER Your claim number

Defendant Your name

First Witness statement

TT1 (budget), TT2 (medical letter)

Date Today’s date

Between County Financial Ltd and Thomas Telford

Witness statement in support of time order application

I, Thomas Telford, unemployed, of 1 Any Street, Any Town, will say as follows:

1. I am the defendant in this matter.  Except as otherwise stated, the statements contained herein are made from my own knowledge.

2. This witness statement has been prepared with the assistance of the local advice agency, and is made in support of the application for a time order and contained in my defence to the possession claim.

3. I am advised by the local advice agency that the hire purchase agreement subject to these proceedings is regulated by the Consumer Credit Act 1974.  It was for £7,000  and was repayable over 4 years at £140 each month.

4. The purpose of the hire purchase agreement was to buy a car.  The loan was not taken out for frivolous or unnecessary reasons.  At the time I entered the agreement, approximately 5 years ago, I could afford the payments. 

5. However, six months ago, I suffered an accident at work and have been off sick since then and, as a result, have had difficulty keeping up with the payments.  In total, I missed the equivalent of four payments totalling approximately £560 before the issue of these proceedings.  Before my accident I had a good payment record and had already paid approximately £7,500.  I am currently relying on Employment and Support Allowance. 

6. Following my accident, I went to the local advice agency for advice.  With their help, I worked out that I could afford a payment of £70 per month.  There is now produced and shown to me marked ‘TT1’ a true copy of my budget which was prepared with the assistance of the local advice agency.  On my behalf, the local advice agency offered £70 to County Financial; but I was told that they were unhelpful and would not agree to reduce payments, or to reduce or freeze interest, demanding the full contractual instalment.

7. Although County Financial refused to consider reducing my payments, following advice from the local advice agency, I have now started paying the £70 each month.  However, as this does not cover the full monthly payment, I am getting further into debt.

8. In spite of the attempts of the local advice agency to explain my circumstances and negotiate a realistic payment, County Financial issued court proceedings.  Following advice from the local advice agency, I returned the admission form (N9C) stating that I intend to apply for a time order.

9. In six months’ time I hope to be fit to return to work.  There is now produced and shown to me marked ‘TT2’ a true copy of a letter written by my doctor in support of this.  When I return to work I will be able to start paying the monthly payments and something towards the arrears.

10. I believe that it is fair to make a time order for the following reasons:

(a) I got into difficulties with this agreement through no fault of my own.

(b)  I have tried to deal with my financial difficulties by seeking help from the local advice agency. 

(c)  I have been advised by the local advice agency that the County Financial were unsympathetic and  unhelpful, and would not negotiate on a realistic basis.

(d) I have a job waiting for me when I have recovered from my accident, which I expect to be  in six months.

(e)  Since taking out the agreement with County Financial, I have taken out no further credit.

(f)  I have already repaid approximately £7,500.

(g)  Looking at the overall situation, compared with losing our car, the effect on the  claimant of a  time order and a freeze of interest and charges for six months is relatively small.

11. I ask the court to make a suspended return order on these terms under section 135 of the Consumer Credit Act 1974, and for the case to be listed for review in six months’ time.  Alternatively, I ask the court to make a time order under section 129 of the Consumer Credit Act 1974, rescheduling payment at £70 per month for a period of six months until I return to work and, in consequence of this, freeze interest and other charges accruing under section 136 of the Consumer Credit Act 1974.

12. I also ask the court to order that County Financial’s costs in respect of this application are not recovered because they failed to negotiate realistically and avoid proceedings, contrary to the CPR Overriding Objective, or to make whatever order as to costs that it considers just.

Statement of Truth

I, Thomas Telford, believe that the facts stated in this witness statement are true.

Signed ……………………………………………………………………………

Dated ……………………………………………………………………………

N244 form

Name of court: Any Town County Court……………………………

Claim number: 54321……………………………………………………

Claimant’s name: County Financial Ltd…………………………………

Defendant’s name: Thomas Telford.………………………………….

[Statement of Thomas Telford, continued from box in part 10 of N244]

9. In spite of my attempts to explain my circumstances and negotiate a realistic payment, County Financial issued court proceedings.  I returned the admission form (N9C) and received an order to return the vehicle.

10. I went to the local advice agency for advice.  With their help, I worked out that I could afford a payment of £70 per month.

11. In six months’ time I hope to be fit to return to work.  I have attached a copy of a letter written by my doctor in support of this.  When I return to work I will be able to start paying the monthly payments and something towards the arrears.

12. I believe that it is fair to make a time order for the following reasons:

(a) I got into difficulties with this agreement through no fault of my own.

(b)  I have tried to deal with my financial difficulties by seeking help from the local advice agency. 

(c) I have a job waiting for me when I have recovered from my accident, which I expect to be  in six months.

(d)  Since taking out the agreement with County Financial, I have taken out no further credit.

(e)  I have already repaid approximately £7,500.

(f)  Looking at the overall situation, compared with losing my car, the effect on the claimant of a  time order and a freeze of interest and charges for six months is relatively small.

Do I have to pay a court fee?

You may be able to get help with court fees, but you need to pass two tests to qualify. For more information, see our Help with court fees fact sheet.

Other fact sheets that may help you

Help with court fees fact sheet

Hire purchase debt fact sheet