When you have mortgage arrears, it is always better to deal with them as early as possible. Otherwise, the ultimate consequence of not paying would be implementing legal action. Since a mortgage is a secured debt, this could mean that you’re going to lose the property against which you had put as collateral. You might have intended to pay off the lender and get the asset back, but things don’t always go as planned.
It is also very much possible that any arrangement you made or offered to the lender didn’t work out and you’ve been taken to court. However, you might be relieved to know, in case you didn’t, there is still a possibility to keep your property. If you get a Time Orders for mortgage from the court, that could help you repay the lender and finally get them off your back. So, here is all the information you’ll need regarding Time Orders for mortgage.
How exactly will a Time Order come to your help?
When the lender takes you to court, you’ll have some options by which you can pay them and save your property from going into their hands. One such option is that — you can apply for a time orders for mortgage, provided that you fulfil the conditions for availing it. While using it, you can get additional time to clear your arrears.
Due to its formal nature, it has legal protection. That means the lenders won’t be able to pressurize you in any way during the time granted to you. A longer time would mean a reduction in the monthly instalments and easier clearing of mortgage arrears. Moreover, you can also have interest rates changed in some cases. However, everything about the arrangement would be decided by the court, based on your financial condition.
The lender might demand you either to pay just the arrears or the entire amount. You can get a Time Order in both these cases. Moreover, you can also apply for it after the court has passed a judgment.
What are the criteria required to apply for it?
There are certain conditions where you are eligible to request a Time Order. First, it is only available as an option when you have taken a loan secured against an asset or property, specifically on land.
Second, at least 40% of it has to be free from any use for business purposes. Most importantly, your mortgage has to be regulated. If you fulfil these two conditions, you should be able to apply to the court to make changes in your arrangement. So, you must make sure while getting a mortgage that the entire arrangement is regulated.
When can you apply for it?
You can apply to the court for this option only after you have got the notice from the lender demanding payment. You can do that either before the court proceeding has started, or during it, or even after a judgment has been passed.
In any case, the court will consider your application only if you’re genuinely unable to repay. Otherwise, there is no point in applying for a Time Order. As long as you can afford to pay, you can’t have any changes made to the arrangement.
How long does it stay in effect?
When the court grants someone a Time Order, it is mostly for a short period of time. You might want more time than they’re offering you. In that case, it would be up to you to explain your situation clearly to the court. They might consider it and give you a long time to pay your lenders, and smaller instalments as a result.
However, it is not at all clear which cases would be considered exceptional. However, one thing you can be sure about is that the court has granted a longer time to debtors in the past.
How do you apply for it?
As you have seen, there are only certain situations where you can request a Time Order. For every case, the information that you’ll have to provide to the court would be the same. You have to request the court to make a Time Order and have the interest rates, and any late payment charges, to be frozen. These rights have been given to you in the Consumer Credit Act of 1974 under various sections.
You’ll have to fill up the essential information regarding your financial activity. Apart from that, you have to offer the amount you want to pay them monthly. This has to be based on a budget that you prepare with the help of a debt adviser. You also have to attach a copy of that with the application.
Next, you’ll have to write clearly on why you’re unable to pay and missed the installments. Give them details of the financial difficulties you’re facing. In case, you can’t be present at the court, give reasons for that as well. Apart from that, you might also want to put in some good points on why they should provide you with a Time Order.
Does the court ever make a Time Order themselves?
If you’re wondering, you can get a Time Order in some cases without having to apply for it. In some cases, the court can decide to make one for you themselves. This is possible only after your lender starts a legal proceeding against you.
In some cases, they might find that you should get more time to write off the debt. This mostly happens when they are convinced that you genuinely need more time to pay. Even though you haven’t applied for it, you can still write to them about your financial problem. This can go a long way in ensuring that they decide to give you more time to pay. Also, you wouldn’t be required to pay any court fee in this circumstance.
How to ensure that your application will be accepted?
There are only certain situations that the court will find giving you a Time Order to be an accurate decision. First, you should have a strong reason due to which you have borrowed the money. Otherwise, there is a high chance of it getting rejected. You should take the loan only after making sure that it’s affordable.
In other words, the loan should have been affordable to you at the time when you took it. That would show that you’re unable to pay because your financial situation has deteriorated. Since that is not always in your hands, the court might think that you deserve more time to pay.
If your mortgage arrangement is quite expensive as compared to others, that can also justify the Time Order. It is also important for you to have not faced any problems regarding credit in the past. Your credit file shouldn’t have any mention of such things when you apply for a Time Order.
Another very important thing that you have to show the court is that you didn’t ignore the lenders. You should have attempted to make all possible arrangements with the creditors to repay them. It is important to show your commitment to paying your debt. You must also show the court that your financial situation will improve, though only if that’s really the case.
In addition to yours, they will naturally want to hear out your lenders as well. Make sure that there should not be any no shortcomings from your side, as it will take you a long way in getting a Time Order.