What is an Administration Order?
An Administration Order is a solution designed to help those in debt who have County or High Court judgements against them that they cannot pay in full.
It’s a legally binding agreement, available to those living in England, Wales and Northern Ireland, that’s made between you and your lenders to pay back what you owe for a set period of time – usually three years. Your debt level cannot be more than £5,000 and you must owe money to at least two companies.
Like other debt solutions, it protects you from any further action being taken against you and stops them from adding interest and charges once it is approved by the court. You’ll make an affordable monthly payment to them that will then be split between all the people you owe money to until the balances have been cleared completely.
Administration Order advantages and disadvantages
There are many things to consider when deciding if this is the debt solution you want to go for, so we’ve laid out all the benefits and disadvantages below for you:
- It’s legally binding, which means that all lenders included are bound to the agreement if it’s approved
- Your payments are calculated to be affordable to you, making them easier to keep up with
- Interest and charges are frozen whilst the order is in place
- There are no upfront fees, but the court does keep 10% of your payments to cover their costs
- Your home is also protected by the order and you won’t be expected to sell or attempt to remortgage it
- You cannot apply for this solution if your debt level is over £5,000
- At least one of your debts must be subject to a County or High Court judgement
- Everything has to be done through the court, which can take some time
- It will affect your credit rating for six years
- If you struggle to keep up with your payments, there can be severe consequences such as having your wages arrested or having the order revoked
What debts can be put into an Administration Order?
What debts you can include in an Administration Order is dependent on the court that you apply to. This is because there is nothing within the law for this solution that specifies what debts can and cannot be included.
Generally, you can include most unsecured debts, but it’s best to check with the court if there’s anything that cannot be included.
A journey through an Administration Order
Applying for an Administration Order can seem complicated. To help explain the process a little better, we’ve mapped it out in a simple step by step guide:
The first step to getting an Administration Order is to get the relevant forms to fill in. To apply, the form you’re looking for is an N92, which you can get these from your local county court or it’s available to print off on the government website.
When filling this in, you’ll need to list all your income, expenditure and details of all the debts you owe. However, it’s important that you do not sign it at this stage as you will need to do this in front of the court.
At this point, you will need to contact the court to arrange an appointment to go and submit your application. A clerk will go through your application to check that everything is in order before witnessing you sign the forms.
You will need to make sure that you bring copies of any letters or statements from the companies you’re in debt to along with a copy of the judgment letter from the County/High Court.
There is no fee to pay for submitting your application, but as mentioned above the court will take 10% of your payments to cover their costs.
Once you have submitted the application to the court, they will then get in touch with all the lenders included – giving them 16 days to respond with any objections to the order.
If there are none, then as long as the judge and the court have no problems with your offered payments, then they will grant the order. All you then have to do is keep up with the agreed payments and your lenders cannot take any action against you.
However, should any of the companies submit an objection within the given timeframe, then the court will need to hold a hearing to try to resolve this. It will be required that you go to this and it will normally be held in the Judge’s chambers along with someone from the objecting company.
When it has been granted, the order will be put on the Register of Judgements, Orders and Fines, where it will stay for six years. This will also show on your credit file and cannot be changed until the order has been cleared.
Life with an Administration Order
Once your order has been granted, all you need to do is make your payments and make sure you keep on top of them.
You will make these payments regularly until you have cleared all of the balances included in your application. The only exception to this is if the Judge decides to give you a ‘Composition Order’.
This is an order that can be made in order to limit the time you will pay back your debts to a total of three years and is normally used if the judge thinks you won’t be able to clear your debts in a reasonable amount of time.
When you have made all required payments, you will no longer be in debt to the companies included. If you need to, you can ask the court for a ‘certificate of satisfaction’ – but this will cost you £15.