An Administration Order is a legally binding agreement that has been issued by a County Court which allows you to repay any debts based on your monthly affordability.
What is an Administration Order?
Administration Orders can be suggested to people who have one or more county court or High Court judgment against them that they can’t pay in full.
An application is made to your local county court, who will then decide whether to grant the order or not.
If it is granted, all the companies you are in debt to that are declared in your application are dealt with together and one monthly payment is made to the local court. This is then spread between them and they cannot take any further action against them without the Court’s permission
Your Administration Order is added to the Register of Judgements, Orders and Fines, where it will stay for six years. When you have paid off all your debts in full, it is marked ‘satisfied’.
You can also pay £15 for a ‘certificate of satisfaction’. To do this, you must write to the court and send a cheque made payable to ‘Her Majesty’s Courts and Tribunal Service’.
However, if you cannot pay back your debts in a realistic timeframe, a district judge could suggest, or you could ask them to consider, a ‘composition order’, which would write off some of the debt.
Are you eligible for an Administration Order?
To be eligible for an Administration Order you must meet the following conditions:
- Have at least one County Court or High Court judgment against you that you cannot pay in full
- Have a total debt level of less than £5,000
- Owe money to at least 2 companies
- Prove you have enough spare income to afford regular repayments
How to apply for an Administration Order
To apply for Administration Order, you must fill out the N92 form – that can be found on the government website – and return it to your local court.
The court will decide:
- The amount of debt you must repay
- The amount that your monthly repayments will be
- The length of time it will take for you to complete the payment plan
You are charged a court fee each time you make a payment. However, this can’t be more than 10% of your total debt. For example, if you owe £3,500, it can’t be more than £350 in total.
What debts can be included in an Administration Order?
All debts can be included in an Administration Order.
This includes any mortgage or rent arrears. However, this will not prevent a landlord or mortgage lender from repossessing your home.
Some social landlords, such as a housing association, are happy for their rent arrears to be added to an Administration Order, but this makes it less likely that you will be able to get any of your debt written off in a composition order.
As such, it is often best to ask the court to leave out the mortgage and rent arrears from the administration order. Many courts allow this, so it is worth asking in your application.
If you are hoping for a composition order, it is advisable that you ask the court to leave out your rent arrears and come to an agreement with your landlord separately.
Living with an Administration Order
An Administration Order is added to the Register of Judgements, Orders and Fines for six years and will have a negative impact on your credit score during this time. This can make it more difficult to get credit in the future.
However, it should be noted that you are entered onto this register through having first had a county court judgment or High Court Judgement made against you anyway which will have already affected your credit score.
If listed creditors still contact you once your Order is in place, tell them that they are no longer allowed to contact you. If it persists, tell the court.
If you have forgotten a creditor, they can be added to the order. However, there is a risk that the court will not accept the new creditor and could revoke your Administration Order
What are the advantages of an Administration Order?
There are some advantages to obtaining an Administration Order, such as:
- One monthly payment to one organisation is a lot easier than several payments to several creditors.
- It frees up your time and effort, and could reduce your stress
- Creditors listed cannot take any further action against you without the Court’s permission
What are the disadvantages of an Administration Order?
- It is only available for people who have at least one court judgment against them and have under £5,000 of debt
- Falling behind on payments can lead to the court applying an ‘attachment of earnings order’, which will allow them to take money directly from your wages or cancel the arrangement
- There are costs payable of up to 10% of your debt level
If your circumstances change
Life is unpredictable and sometimes you may find your circumstances – for example, you might lose your job or one of your benefits.
If this happens, tell the Court immediately.
You can ask them to review the order to lower your monthly amounts, or alternatively ask for a composition order which will write off some of your debts. If you miss two payments in a row, the court have the right to revoke or review the Administration Order.
The court will notify you with a ‘notice of intention’. You must reply within 14 days, or your order will be revoked.
If your Administration Order is revoked, your creditors are free to contact you again and can add backdated interest or begin enforcement action against you. Your best action in this instance is to contact your creditors as soon as possible to arrange repayment.
Get Help & Advice
The Administration Order can be a very manageable solution for some. However, our advice would be to try and get control of your debts before this happens.
If you are struggling with debt and are looking for some advice, call today and speak to one of our experienced advisors who can help you find the right solution for your financial circumstances.
Frequently Asked Questions
You must complete an N92 form – you can get this from your local county court – and apply to the court for the order. They will then decide whether or not to grant the order, how much you’ll have to pay and how long you will have to pay for.
Once you have completed the order, you’ll need to pay £15 to get a ‘certificate of satisfaction’ from the court. Companies that were included will no longer be able to try to collect the debt or take any action against you and the debts will be fully repaid.
Details of your order will stay on the Register of Judgements, Orders and Fines, but it will be marked as satisfied.
Administration orders usually last until you have paid your debts in full. However, if you have a composition order, there will be a restriction on how much time you will have to pay – normally three years.
In order to qualify for an administration order, you must be in over £5,000 of debt to at least two companies. You must also have a county or high court judgement taken out against you that you cannot pay.
If you fall behind in payments to an administration order, you can ask the court to amend the order. However, the court can apply to have it cancelled, meaning that the companies you are in debt to will then be allowed to contact you again and make attempts to collect what they are owed.
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