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Court order will ensure time is not your enemy

It's all just a matter of time…There may be those of you reading this who are struggling to keep financially afloat at the moment. You may be under pressure to repay loans taken out during more buoyant times and feel that you have no solutions to a mountain of problems.

Under new legislation, which came into force in October 2008, consumers can now go to the court to ask for longer to pay back loans if they have received a Notice of Sums of Arrears (usually issued after two missed payments). This is called a Time Order. Before this change you could only apply for a Time Order after you had received a Default Notice, which is a record placed on your file by creditors stating that you have defaulted in some way.

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 loan repayments. It may also reduce the payments or reduce the interest rate, for example until you find employment again. Importantly, a Time Order is an order made by the court and so is enforceable against the creditor. Consumers may find this particularly useful if the loan is secured against their home and the lender is threatening repossession.

This is only applicable, however, if your loan agreement is regulated by the Consumer Credit Act 1974. This means loans of up to £15,000 if taken out before 01 May 1998 and loans of up to £25,000 if taken out after 01 May 1998. It might be worth checking your loan terms to see if this applies to you.

The amendment to the law seeks to make consumer credit agreements and consumer hire agreements fairer.

If the court considers it 'just' to do so, it can not only give a consumer longer in which to repay the debt, but can amend the initial agreement as a consequence of the Time Order, for example to reduce the rate of interest or reduce the monthly repayments to an amount that they consider that you can afford.

In considering whether it is 'just' to make the time order the court will look at many factors. These may include your payment record (have you been good at making payments on time); whether the situation is temporary (for example temporary unemployment); or have you tried to sort out the problem with the creditor and not just ignored the situation. The court will also consider whether you can in fact afford to pay what you have offered, or indeed whether you can actually afford to pay more.

The amendment will bring welcome relief to consumers struggling to keep on top of their finances during this difficult economic climate.

If you would like more information on this or any legal disputes issues please contact James Taylor on 0117 9292811.

James Taylor

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