An administration order is a repayment plan arranged by your local county court. Administration orders are only available in England, Wales and Northern Ireland.
To apply for an administration order you need to have:
less than £5,000 in unsecured debt (including arrears on utility bills and other priority payments such as rent arrears or fines), and
a minimum of 2 debts, and
at least one existing County Court or High Court judgement.
To apply, you need application form N92 which can be obtained from the County Court. You must list all of your debts on this form and complete the statement of means. Guidance notes can be found on form N270.
How an administration order works
If your application is accepted, you will make one payment to the court each month. This payment is an amount you’re able to afford after paying for all your essential bills. The court deducts 10% as an administration fee and then pays the balance to your creditors on a pro-rata basis on your behalf.
The main advantages of this arrangement are that you don’t have to pay a fee to set up an administration order and your creditors cannot contact you for payment (without the courts permission) or add any more interest onto the amount you owe once the order is arranged.
You can attempt to include any debt. However most priority creditors will object and the judge may agree to exclude them meaning you will still have to maintain payments to such debts.
If you can only afford to pay a small amount each month towards your debts you can apply for a ‘composition order’. This sets a date for the administration order to end. When you reach this date your creditors write off any remaining debt. The court will only consider this if your payment won’t clear the debts in a reasonable amount of time, usually in at least 3 years.
An administration order will last until you have repaid your debts in full, unless the ‘composition order’ mentioned above applies. It is registered with the Registry Trust who pass the information to the credit reference agencies and so will show on your credit file for 6 years so during this time it will be difficult to take out any further credit.
We will let you know if this is an option for you. Further information can be found on-line at www.gov.uk/options-for-paying-off-your-debts/administration-orders