What is an administration order?
*Please note this solution is only available in England, Wales and Northern Ireland
An administration order is a debt solution that allows those who have a county court or High Court judgement against them to deal with their debts.
Put simply, it’s a legally binding payment plan arranged by the court. All applications are submitted to your local county court and they will then decide whether to grant your order or not.
Once granted, your lenders won’t be able to chase you for payment or take legal action against you. You make one monthly payment to the court, where their staff will then split this between all the people you owe money to.
How much does an administration order cost?
Administration orders come with no fees, but the court will take 10% of your payments for their costs.
How much you will pay into the order will depend on how much you can afford after covering all your essential living costs. As such, this will differ from person to person.
Do I qualify for an administration order?
You do have to meet a strict set of conditions to be able to apply for an administration order. You must:
- Have a total debt level of less than £5,000
- Be in debt to at least to lenders/people
- Have at least one county or high court judgement against you that you are unable to pay
- Receive a steady income that leaves you enough to be able to make affordable payments
If none or only some of these apply to you, you won’t be able to apply for an administration order and will need to look into other options for dealing with your debts.
How do I apply for an administration order?
The process is differs slightly depending on where you live, the majority of the steps are the same:
- If you live in England or Wales, you’ll fill in a N92 form from the court, which will detail your income, expenditure and debts, and return it to the court. For those who live in Northern Ireland, you’ll need to get a form 11 from the Enforcement of Judgements Office (EJO), fill it in and return it.
- Depending on your situation, the court might ask you to attend a court hearing in front of a judge, who will then decide whether to grant the order or not. However, if everything on your paperwork looks straightforward, then the court might decide without a hearing.
- Once granted, you’ll make one monthly payment to the court towards your debts. In some cases, the court might decide to take the money straight from your wages to make keeping on top of payments easier for you.
- Once you have cleared your debts, then the order will be completed, and you will no longer owe money to the lenders included.
For those who are only able to pay a small amount, you have the option to request a ‘composition order’, which puts a time limit on your administration order (generally three years). Once the composition order has ended, any remaining debt is written off.
However, it’s important to note that a composition order will only be given if your payments won’t clear your debts in a reasonable amount of time. Otherwise, you will have to make payments until the debts are paid in full.
What debts can be included in an administration order?
You can include the majority of your debts in an administration order. However, in some cases the judge may decide to leave some of them out such as a criminal fines or council tax arrears.
It’s also possible for a lender to object to being included in the order and ask the court to be left out. In these instances, a hearing will be called by the court to decide whether or not it’s fair to keep the debt included.
Will an administration order affect my credit rating?
As with most debt solutions, yes it will affect your credit rating. Once your order is in place, it will show on your credit file for six years after it was granted.
It will also be recorded on the Register of Judgements for the same amount of time. This is a public record, which can be seen by lenders and make it harder for you to get credit in the future.
What happens if my circumstances change in an administration order?
Understandably, your life won’t stay the same for the duration of your administration order. If your circumstances change at any point, it’s important to notify the court straight away.
Depending on what has changed, you can ask for the order to be reviewed for your payments to be lowered or request a composition order – which will allow you to have some of the debts written off.
If the change results in you missing two or more payments, then the court are within their rights to revoke (cancel) your order. In these cases, you will be sent a ‘notice of intention’, which you have to reply to within 14 days. If you don’t, then it will be revoked.
This will mean your lenders will be able to begin contacting you again, adding interest/charges and even taking legal action against you. In these instances, the best thing to do is to contact your lenders as soon as you can to negotiate payment.
If you need more information or advice on the options for dealing with your debts, we’re here to help. Just click below to be connected to one of our expert advisers.
Advantages of using a Administration Order
- Paying back your debts becomes much more manageable as you’re only making one instead of several
- It gives you stress relief and saves you a lot of time and afford since the court deals with your debts for you
- Interest and charges are frozen on the debts included
- Your lenders cannot take any further action against you once the order is in place
Disadvantages of using a Administration Order
- Due to the strict criteria, not everyone can apply for this solution
- If you do not keep up with payments, the court can put an ‘attachment of earnings’ in place, which will mean the money will be taken straight from your wages.
- It will affect your credit rating
- The court will take 10% of each payment towards their costs, meaning only a port of what you pay will go towards your debts
For more information about the benefits and risks of an administration order, it’s best to speak to a debt advice service such as ourselves. This will help make sure an administration order is the right option for you.