A time to pay application is a form that you can complete when a creditor takes you to court for non-payment of debt and you are not disputing the amount owed or the liability.
It’s a form that gives you the right to apply to the court for an order which allows you to pay fixed monthly instalments or a deferred lump sum.
You need to think carefully before you apply for a time to pay. Do you owe the debt? If not, you should not be applying for a time to pay as it is not a defence. You need to think about why you don’t owe the debt and look to seek advice from our debt specialists.
What is a Time To Pay Direction?
A time to pay direction is regulated by the Debtors (Scotland) Act 1987
This means the court allows you time to pay the decree either by instalments or by a deferred lump sum payment.
During the period that a time to pay direction is in force, it means no further action, for example, diligence, can be taken against you while the time to pay direction is in force.
“While a time to pay direction is in effect, it shall not be competent—
- to serve a charge for payment; or
- To commence or execute any of the following diligences—
- An arrestment and action of furthcoming or sale;
- An attachment;
- An earnings arrestment;
- An adjudication for debt,
To enforce payment of the debt concerned” – 2.1 – Effects of time to pay diligence.
The court cannot, however, make time to pay directions for:
- debts over £25,000
- awards in connection with divorce or maintenance
- income tax, VAT or car tax
If you miss two payments under the time to pay direction, on the third payment due date, the direction will collapse. At this time, your creditor can begin to enforce the payment and continue with diligence.
“If, on the day on which an instalment payable under a time to pay direction becomes due, there remains unpaid a sum, due under previous instalments, of not less than the aggregate of 2 instalments, the direction shall cease to have effect.” – 4.1 – Lapse of time to pay direction.
What is a Time To Pay Order?
A time to pay order can only be applied for if a court order has already been granted.
“Subject to subsections (4) and (5) below, the sheriff may, on an application by the debtor, make an order that a debt to which this section applies (including any interest claimed in pursuance of subsections (6) and (7) below) so far as outstanding, shall be paid—
- by such instalments, commencing at such time after the date of intimation in accordance with section 7(4) of this Act by the sheriff clerk to the debtor of the order under this subsection, payable at such intervals; or
- as a lump sum at the end of such period following intimation as mentioned in paragraph (a) above,
as the sheriff may specify in the order.” – 5.2 – Time to pay orders.
Similar to a direction, this order allows you to pay in instalments or with a deferred lump sum if it is unaffordable to clear immediately.
It’s free to apply for, but it may be worth seeking advice from our specialists, as there may be other free options available to you.
What is a deferred lump sum?
A deferred lump sum means that you will be ordered by the court to pay the whole amount at one time at a future date that the court will specify.
What’s the difference between a Time To Pay Direction and a Time To Pay Order?
The main difference you need to be aware of is the direction is before a change has been granted. The order is after the charge has been granted by the court.
If you applied for a direction and the court declined, you can not apply for an order.
The form needed to apply for a direction is included in the court summons or writ that you receive before the decree is made.
The form needed to apply for an order is available from the Sheriff Clerk’s Office and other approved debt help specialists. You can also download one online.
What is a Time Order?
Time to Pays should not be confused with Time Orders which are regulated by the Consumer Credit Act 1974.
“A time order shall provide for one or both of the following, as the court considers just—
- the payment by the debtor or hirer or any surety of any sum owed under a regulated agreement or a security by such instalments, payable at such times, as the court, having regard to the means of the debtor or hirer and any surety, considers reasonable;
- the remedying by the debtor or hirer of any breach of a regulated agreement (other than non-payment of money) within such period as the court may specify.” – 129.1 – Time orders.
A time order means if you have received a notice of sums in arrears or a default notice because you have missed payments to a secured loan or second mortgage, you can apply to the sheriff court for a Time Order. This allows you to repay your loan (including the arrears) and preventing your lender from taking further action.
Time orders are granted by the sheriff court. It will change the conditions of your secured loan or second mortgage to make it possible for you to pay it back in smaller amounts. For example, a time order can;
- allow you to pay the rest of the loan due in instalments
- reduce the rate of interest of the loan to make your payments more affordable
- extend the term of the loan so that you can pay it back in smaller instalments over a longer period of time
- give you an extended deadline to clear any arrears
Time orders are regularly allowed as a temporary measure for individuals with brief financial troubles. You may need to begin paying your original instalments after a predefined time. It is unlikely a Time Order will be conceded on the off chance that you won’t probably won’t be able to repay the loan eventually.
What happens after I apply?
When you have made an application, a sheriff will send a duplicate of the application to your creditor. They at that point get the chance to consent to your application, or in the event that they don’t concur, they can express their complaint to the court and a court date is set for your application to be heard by the Sheriff.
In the event that your creditor does not object to the instalment offer, the sheriff will concede a time to pay order after 14 days. This effectively freezes diligence. Your creditor can’t complete an attachment, apply for an exceptional attachment order or instruct an arrestment of your wages or accounts.
On the off chance that the creditor objects to the instalment offer, a date for a hearing will be fixed. It is possible that you or your advisor can talk with the sheriff who will settle on the rate of repayment. Practically speaking, time orders should be satisfied in roughly two years.
Time to pay orders keeps creditors from applying pressure on you to pay funds that you can’t afford at the time.
What are the effects of a Time To Pay?
The effect of a Time to Pay is it protects you from the creditor taking further action against you. This means they cannot serve a Charge for Payment, arrest your earnings, execute a bank arrestment, or attach any property as mentioned above. They also cannot raise a petition for your sequestration.
However, they can still apply a rate of interest to your debt. 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.
Which debts is a Time To Pay applicable to?
Time to pay directions and orders are when you are asking the Sheriff court to ask to stop the creditor from being able to use diligence action such as an earnings arrestment (take money from PAYE wage)/bank arrestment (take money directly from a bank account) to recover money that is owed to them.
A time to pay direction can be used following a creditor usually for a credit debt such as a credit card/personal loan/overdraft/old telephone company seeks to apply to the sheriff court for a decree to recover the money owed.
A time to pay order can be applied for once a creditor has applied for diligence action and can be used for council tax arrears as well as the previously mentioned debts above.
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Example Unsecured Debts
|2||Credit card 1||£6,812|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
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