DEBT SOLUTIONS
Administration Order
DEBT SOLUTIONS
Administration Order
What is an administration order?
An administration order (AO) is a legally binding administrative arrangement issued by a court. It allows you to repay only what you can afford each month towards your debts.
You might consider an administration order as a viable debt solution if you have at least one county or high court judgement against you. As soon as your creditors legally pursue you for your debts, you will be able to apply for an administration order as a way of repaying your debts on your terms.
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How does an administration order work?
Applications for administration orders are made to your local county court – they will decide whether or not to grant the order.
If the order is approved, all the creditors declared in your application will be repaid via a single monthly payment made to the local court.
The local court will manage payments to all unsecured creditors within the orders. Once the order has been granted, any creditors included cannot take any further action against you without the permission of the court.
What debts can be included in an administration order?
All debts can be included in an administration order, however there is the possibility that a judge may leave out certain debts – like council tax arrears or criminal fines – at their discretion.
Some creditors may object to being included in an administration order. If this happens, the court will call a hearing to decide whether it’s fair to leave the debt in the order or not.
Who can apply for an administration order?
If you want to apply for an AO, you will need to meet the following criteria:
- You have at least one County Court Judgement (CCJ) or high court judgement against you
- You need to protect yourself from creditors, i.e. stop them from pursuing legal action against you
- You have debts of less than £5,000
It’s only once creditors have taken legal steps to pursue your debts from through the courts, that you will be able to apply for an administration order.
What if I owe more than £5,000?
If your debts total more than £5,000, you are not eligible for an administration order. However, you could possibly speak with your creditors to negotiate the amount of debt you’re able to repay to bring your debt level down to £5,000 in order to enter the order.
Some creditors may look favourably on this course of action if they think they will get more money back overall with an administration order.
Applying for an administration order
Step 1: Dealing with your local county court
Applying for an administration order is fairly straightforward. First, you’ll need to complete an N92 form, which can be found on the gov.uk website, then hand this in to your local court.
The court will then decide how much of your debt you’ll have to repay, the amount of your monthly repayments, and the length of time it will take for you to complete your repayments. All debts should be repaid in a reasonable amount of time.
If a district judge is concerned that an administration order will not help you achieve this, there is a possibility they will suggest an alternative arrangement known as a compensation order, which would still allow you to write off some of your debt.
Step 2: Paying your creditors
When establishing repayments, the court will assess your financial situation, taking into account essential expenses to make sure you can afford monthly repayments.
This payment is made to the court and will then be distributed between creditors on your behalf. There is a court fee each time you make a payment, however this cannot be more than ten percent of your total debt. For example, if you owe £2,500, the court fine won’t total more than £250.
Step 3: Being discharged from your AO
An administration order is added to the Register of Judgements, Orders and Fines where it will stay for six years. Once your debts have been repaid in full, your order will be marked as ‘satisfied’.
What is a composition order?
The purpose of an AO is for you to repay your debts to creditors in a reasonable amount of time, using monthly payments. If the level of payment you can afford makes it clear you can’t repay your debts in within a reasonable period – usually three years – you may be subject to a composition order.
A composition order is an order that comes from the court, and allows you to repay your debts within a set timeframe. As long as you keep up with your monthly payments for the length of that time limit, any remaining debts will be written off at the end of your agreement.
Will an administration order affect my credit rating?
Yes. The details of your administration order will be visible on your credit history for six years. This could make it harder to obtain credit or make it difficult for you to open certain types of bank account.
What if my circumstances change during an administration order?
If your circumstances change during the course of an administration order, the most important thing to do is to make the court aware as soon as possible. The court can review the order to reduce the cost of your monthly payments, or could ask for a composition order which will write off some of your debt.
It’s important to note if you miss two payments in a row, the court is likely to review or even revoke the administration order. If you find yourself in this situation you’ll receive a Notice of Intention and will need to reply within 14 days, otherwise the order will be revoked.
At this point, creditors are free to contact you again, could potentially add backdated interest to your debt, and may begin enforcement action to recoup payments. If this happens, it’s imperative to speak to your creditors as soon as possible to arrange payment.
What are the advantages of an administration order?
- You’ll make one monthly repayment towards your debt rather than juggling several payments to several creditors at a time.
- Once it’s approved, the creditors included in the administration order won’t be able to take further action against you without the court’s permission.
- Repaying your debts can help you improve your credit rating in the long run.
What are the disadvantages of an administration order?
- This is only available to people who have at least one court judgement against them and have less than £5,000 of debt.
- If you are unable to keep up with payments, the court can take money directly from your wages in what is known as an ‘attachment of earnings order’.
- Your credit rating will be adversely affected, at least temporarily.
- The administration order is added to the Register of Judgements, Orders, and Fines.
- Costs are payable up to ten percent of your debt level.
Where can I get debt advice and find out more about administration order?
If you’re struggling with money, have debts of less than £5,000, and have one or more County Court Judgements against you, an administration order could be a useful way for you to protect yourself from legal action – but you should always take money advice before making a final decision.
If you’re looking for more information on administration orders, or are simply looking for some useful debt advice, you can talk to a Carrington Dean debt adviser for free today. Contact us now on 0808 253 4082.
Frequently Asked Questions
An administration order is a legally binding arrangement between you and your creditors, issued by the court. It allows you to pay back only what you can afford against your debts over a period of time.
This can be done by filling in an N92 form and applying directly to the county court for the order. The court will then decide how much you have to pay and how long you’ll pay it for.
An administration order lasts until the debts are cleared and the court fees paid. If there is a composition order, there will be a time limit on how long you pay; this is usually three years. At the end of that time, you no longer owe the debts in the administration order.
Once you have paid your order in full, you can pay £15 to get a certificate of satisfaction from the court.
The details of your agreement will be kept on the Register of Judgements, Orders and Fines, and your file will be marked as satisfied.
The creditors included will then no longer be able to take any action against you because you will have paid the amount agreed or in full.
The court can cancel or revoke your administration order if you don’t keep up with the payments.
If your administration order is revoked your creditors can pursue you again for each debt you owe in full, even if you had a composition order made.
As with all debt solutions, there are strict criteria. These must be met for you to be considered eligible for an administration order. To apply, you must:
- Have debts that total no more than £5,000
- Have at least one county court or high court judgement against you that you can’t pay in full
- Have two or more debts
You cannot apply for an administration order if you don’t have a county court judgement against you. If you would like to enter an administration order, you’ll need to wait for a creditor to take legal action against you before you are able to apply.
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