An administration order is a formal court order preventing further action from creditors whilst you make a single monthly payment to the court. The court staff divide your payment amongst your creditors on a pro-rata basis.
The court may grant an Administration Order providing you have at least two debts. At least one of your debts must be a County Court or High Court judgment against you. Finally your total indebtedness must be less than £5,000.
Administration and Composition Orders
Once an Administration Order has been given the court will deal with your debts on your behalf, and interest and other charges that were accruing are stopped.
You do not have to pay an up front fee to the court for an Administration Order. For every pound that is paid in to the court, the court will deduct a handling fee of ten pence. This is for the duration of the order. This means the handling fee is 10% of your total debts. If you are only paying a small amount to your creditors there is a danger that your Administration Order could go on for years.
You can therefore apply for a Composition Order. This is an order where you only have to pay part of your debts, usually an affordable amount over a three-year period. You can apply for a Composition Order separately, even after your Administration Order is up and running. To apply for a Composition Order after the Administration Order has been made, use form N244 which you can get from your local County Court.
You should take statements or letters from your creditors with you to the court as they may want to see proof of your debts. They will also want to see proof of any County Court or High Court judgments you have listed. You should keep a copy of your application, for reference, and in case there are any problems later on.
Once the court has accepted your application your creditors will be notified. Your creditors will have 16 days in which to inform the court of any objections or if they think the offer is too low or the amount owed is incorrect. Priority creditors such as mortgage, rent, and energy suppliers, are likely to object because they may want to make separate arrangements. The order is made if no objections are received within the time, and the court is happy with what you have offered. It is important to attend the hearing and to notify the court if you cannot attend, so the hearing can be rearranged. If your application is not accepted you may have grounds for appealing or making a new application.
Details of your Administration Order will be recorded on credit reference files for a period of six years from the date of the Administration Order and kept on the Register of Judgments, Orders and Fines. When you have paid the order off in full you can get a ‘certificate of satisfaction’ from the county court. You have to pay a fee for this.
Changes in circumstances
If you have a change of circumstances that means you have less money available or feel the court has set the payments too high, you can make an application to change the amount you pay using form N244 (available from the County Court). You should not pay a fee for making this application, as costs to cover fees are treated as already being covered by the ongoing deductions in your administration order. You will usually have to attend a hearing with the district judge, who can change the terms of the Administration Order or Composition Order. It is important to apply for a variation if you are struggling because the court can cancel or your order if you do not keep up with the payments.
If you need assistance in completing the Administration or Composition Order and advice about your local court practices, you should contact your nearest local advice agency.