An Administration Order could be helpful for individuals struggling to repay debts under £5,000
If you’re in debt and you’re starting to feel overwhelmed by the letters, phone calls and threats of legal action from your creditors, then an Administration Order (or Admin Order) may be an appropriate way to help you get in control.
What is an Administration Order?
An Administration Order allows you to make a single monthly payment to the county court, which then distributes the money to your creditors.
Administration Orders also prevent your creditors from placing any further demands on you, which means the stressful letters and phone calls will stop.
The advantages of an Administration Order
Administration Orders are sometimes referred to as a ‘mini-bankruptcy’ but this is misleading. There are distinct advantages to choosing an Administration Order over bankruptcy.
For example, once the Administration Order is in place your creditors can’t take any action against you. You make one simple monthly payment to the county court and the payment you make is based on what you can afford.
Debt collection procedures and letters against you will be stopped and you don’t have to pay an up-front fee to the court. Instead the court takes a handling fee of 10 pence out of every £1.00 you repay during the Administration Order.
Do you qualify for an Administration Order?
There are however some rules and restrictions which determine whether you’ll qualify for an Administration Order.
You must have at least two creditors and your total debt must be less than £5,000. Administration Orders are only given to individuals (not businesses) and if you are in a couple and your finances are shared you can’t apply jointly – you need to make separate applications.
How do you get an Administration Order?
If you’re considering applying for an Administration Order, you need to fill in an N92 form, which is available from your county court. The form asks you to declare all of your debts which total less than £5000. Remember that couples can’t apply for Administration Orders together, but there is a possibility that the debt can be split in two.
The Administration Order process is taken care of by a licensed insolvency practitioner, an administrator appointed by the court. If you need help applying for an administration order or have any further questions, get in touch with the Citizen’s Advice Bureau or a debt charity like CCCS or National Debtline.
What you need to consider when applying for an Administration Order
A creditor is allowed to object to an Administration Order and request that they are excluded from the arrangement, but the court may refuse their request.
Your employer may be informed that you are using an Administration Order to pay off your debt, so you need to consider whether this will affect your relationship with them.
Keeping up your monthly payments
An Administration Order lasts until all your debts are paid off in full. So remember that if you’re only paying a very small amount to your creditors, you could be paying your Administration Order for years. If you can’t keep up your monthly payments, the court may withdraw the Administration Order.
This means that your creditors are then entitled to ask you for the full amount you owe them. If your circumstances change and you can’t afford to pay the amount in the order, you can ask the court to review the order and reduce the payments. Special allowances are made for certain circumstances, such as losing your job or a close family bereavement.
What happens when my Administration Order is paid off?
When you’ve paid the Administration Order off in full you can get a Certificate of Satisfaction from the county court, which you will have to pay a fee of up to £15.00 for.
You should send a copy of the certificate to credit reference agencies to prove that the Administration Order is complete. Details of your Administration Order are kept by the Registry of County Court Judgments and credit reference agencies.
These agencies should mark your file to show that the debts have been paid and the Administration Order is complete. A record of the Administration Order will stay on your credit file for six years from the date of the Order.
Alternatives to Adminstration Orders
If you find that an Administration Order doesn’t suit your circumstances, there are other options available such as Individual Voluntary Arrangements, bankruptcy, Debt Relief Orders or Debt Management Plans.