Administration Order

What is Administration Order?

Administration orders are granted by the county court in order to settle outstanding debts of an individual. You can apply for administration order if your outstanding debt is less than £5,000, at least one County Court Judgement and more than one creditor. If you get an administration order, the creditors will not be allowed to take any action against you.

Like debt consolidation the Administration order enables the borrower to accumulate all his loans into a single monthly payment. But in this situation he will be required to make payments to the court. The court will administer the process and distribute the money to all creditors on a pro-rata basis.

There is no application fee but the court charges 10% of the total amount of repayment for administering the process. This fee will be deducted from your monthly payment.

Since the administration orders are given on a debt less that £5,000, borrowers are generally allowed to pay off their non-priority debts. The administration orders are granted when the borrowers wishes to settle debts like

• Arrears on gas, water and electricity
• Council taxes
• Non priority debts

Sometimes the court allows the borrower to pay less than what he owes. This is known as a composition order. But this will only be applicable for those who will not be able to pay off his debts in 3 years.

The debtor can request for a debt write off but it solely depends on the court’s decission. Similarly a creditor may request the court for an exclusion from the administration order but the court will make the final decision. top

How to apply for Administration Order?

To apply for an Administration Order on submit Form N92 in you local county court. The form is available in the court office.

The Court decides:

• The amount of money you need to pay to the court each month. This will be determined by taking your personal circumstances as provided on your application.
• To make an ‘Attachment of Earnings Order’ for the payments to be deducted directly from your earnings. You can request an objection at the hearing if you believe that such an order will risk your job. You could request for a ‘Suspended Attachment of Earnings Order’ which will only come in to action if you fail to make your monthly payments in time.
• If any creditors should be excluded from the list of creditors; and
• If an option of writing off a portion of your debt will be granted following the Composition Order (Form N244) if you submit one.

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What happens if creditors object to the proposed rate on your Administration Order?

The hearing in such situations is held before the District Judge in chambers. You will be given a 14 days notice and you must attend the hearing, failing which your application will be dismissed. In such an event you will be liable to your creditors’ claims. Creditors are entitled to make objections but non priority creditors, generally, do not object. In practice non priority creditors will always be included in the Administration Order and priority creditors will not be included unless they agree to the terms set by the court.
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Advantages of Administration Order

Administration Orders have quite a few advantages. Some of the important among them are as follows:

• Your unsecured debts will be accumulated into a single monthly payment. This monthly payment remains fixed throughout the tenure of the administration order
• After an administration order is granted by the court, the creditors cannot charge further interest on the debts.
• The composition order from the court enables you to write off a portion of your unsecured debt.
• Once an administration order is granted, the creditors cannot take further action on those debts.
• No creditor can file for bankruptcy if you owe less than £1,500. The creditor must petition bankruptcy against the debtor within the 28 days of notice of the court failing which it will get included in the administration order.
• You can avoid dealing with all your creditors or bailiffs or even court appearances.
• The process is faster than any other repayment scheme.

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Disadvantages of Administration Order

• You cannot get an Administration order if your debt is more than  £5,000
• Priority debts may not be included in the Administration Order. Thus it is ot a complete debt solution.
• Creditors who are not included in the Administration order can apply for enforcement orders against the debtor.
• If you default in your repayments the court will revoke the administration order placing a restriction by which you will not be able to borrow more that £500 without informing the creditor.
• The administration order can be reviewed by the court or the creditor to make changes in the repayment schedule.
• It may take more than three years to pay off your debt
• You will not be entitled to hold certain positions
• Administration orders remains for six years on the credit history. Thus it may be difficult to get loan in future.

The courts in different areas can handle the orders differently. However no application will be rejected without a hearing. You will require legal to complete the procedure and no public aided legal services will be available for you. After full payment you may get a “Certificate of Satisfaction” from the court for £10.

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What is a composition order?

Composition orders can only be made by the District Judge. It is generally more appropriate for people who thrive on a low income, such as the sick or the disabled, senior citizens, the unemployed and lone parents. Nevertheless, you can apply for a composition order. To apply, you need to fill out form N244 which is available at the court. No fee is charged for this application. Your application is not to be rejected without a hearing if the court does not agree to it.
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