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Administration Orders

Monday, 27th April 2009

An Administration Order is a court order which covers your outstanding debts, including any arrears on council/poll tax debts. Under this order you will need to make a monthly payment to the court, who will then distribute that money on a pro rata basis to your creditors.

How does the Administration Order protect me from my creditors?

Whilst the order is in place, no creditor that is included in the order will be allowed to take any action against you without the leave of the court. Letters and debt collection procedures against you will be also be stopped.

Disadvantages of an Administration Order

By entering into an Administration Order you will have broken the terms and conditions with your creditors, they in turn will update the credit reference agencies which will result in your credit worthiness been reduced, in any event, once you received the county court judgement then your credit was already marred.

Advantages of an Administration Order

  • Interest and additional charges are stopped once the order is made
  • No fees up front
  • The court deals with the creditors and not you

Who can apply for an Administration Order?

You have to meet certain conditions before you are eligible to apply, theses are;

  • You must have at least one County Court Judgement, CCJ, or High Court Judgement registered against you
  • You need to owe money to at least two separate creditors
  • Your total debt must not exceed £5,000

How do I apply for an Administration Order?

  • You will need to complete a form N92 that you can get from your local court office, the form will come with some notes on how best to complete it
  • Be sure to insert the name of your county court as this may be different from the one a creditor has used when taking action against you
  • On the form you will need to detail all your debts, which must not exceed £5,000, if you have arrears on priority creditors you will have to detail this as well, however, you will then need to confirm that you have made separate arrangements to pay these priority debts
  • Administration orders are only issued to individuals. When the debt is a joint and several liability, you should include the whole debt. Even if finances are shared, couples cannot apply jointly and therefore must make separate applications
  • If a creditor has instructed a solicitor or agent to act on their behalf you will need to detail the contact address and reference of the company so that the court can make the payment
  • If you don’t state on the form that you can afford to pay each month then the court will make this decision for you
  • To see how much money you have each month to pay to your unsecured creditors you can complete our budget wizard
  • If you are on a low income, or receive benefits/income support then the court will consider a payment of between £1 and £5 per month.

Do not sign the form at home because you will need to sign it in the presence of a member of the court staff declaring that the contents of the form are true, this can only be done after the court official has verified the form.

If the situation arises whereby a couple each make an individual application for an Administration Order at the same time and there is a joint liability, then it may be acceptable to divide the debt equally between the two applications.

You may also wish to apply for a Composition Order (see below for more info) at the same time you apply for the Administration Order, as the former will limit the period of repayment, usually 3 years.

How do I pay the court with my Administration Order?

If you are in regular employment when you make the application for the Administration Order then an Attachment of Earnings Order will be made, this is where a sum of money is deducted from your salary each month; to arrange for this to be done the court will contact your employer. To prevent your employer from becoming aware of your personal circumstances you will need to detail on form N92 that you DO NOT wish for the Attachment of Earnings Order to made.

Will there be any fees for an Administration Order?

The Court will deduct 10% of your monthly payment, i.e. 10 pence for every pound you pay as their administration fee of the arrangement.

What happens when all the debt has been repaid?

You can apply for a Certificate of Satisfaction; there is usually a charge for this, £10.

What if my circumstances change during the Administration Order?

If you have a change in your circumstances, you will need to inform the court to see if you can get your payments reviewed.

What will happen if I miss some of the payments that I agreed to under the Administration Order?

If you do not keep up with your repayments, the court can revoke the order and your creditors will then be entitled to pursue you for the full amount owed to them. If you feel you cannot afford to pay the amount requested of you, you will need to ask the court to reduce your payments. For this you will need form N244.

Conclusion

Applications for Administration Order’s vary from court to court and area to area and there are no detailed guidelines that individual courts have to adhere to, if you are unsure on any matters then take a look at our list of helpful organisations.

What is a Composition Order?

If you are only paying a very small sum each month to your creditors then it is obvious you will be paying for a very long time under the Administration Order. A Composition Order is a way of trying to make sure that this does not happen. If the court grants a Composition Order then you will only be paying the creditors featured in your Administration Order for 3 years. This could result in you only paying back part of your debt.

Once you have established how much you can afford to pay each month to your unsecured creditors, then this figure is used in comparison with how much you owe.
You would expect the court to automatically consider whether it is appropriate to make a Composition Order in your case, however, you may be wise to note in the ‘anything else you would like the court to take into account’ box at the end of the form, that you would like a Composition Order.

I forgot to ask for a Composition Order can I still get one?

If you do not have a Composition Order then you can apply for one separately, even after your Administration Order is up and running. You will need form N244 which you will get from your court. The court can either agree to your application or ask you to go to a hearing with a District Judge in the county court for further consideration. Your application should not be rejected without a hearing.

How much does it cost to apply for a Composition Order?

You should not have to pay a fee for such an application.

 

 

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