A Guide To Administration Orders - Admin Orders Explained
Being deep in debt can be overwhelming. Creditors send letters, call frequently, and often threaten legal action. An Administration Order can be a solution to what seems an impossible problem. An Administration Order allows the debtor to pay the county court once per month. The money is then distributed by the court to the creditors involved.
The key benefits of an Administration Order are:
- Application is free
- Payments are easier to manage
- Only one simple payment is made to the court each month
- Exact amounts are distributed to all creditors by the court
- Debt collection procedures are stopped
- Agreements can be reviewed and payment amounts adjusted
- Debts will be settled completely after monthly payments are made.
- Payments are calculated based on what the borrower can afford
- Special allowances can be made if circumstances change
To qualify for an Administration Order, applicants must already have a County Court Judgment (CCJ). Their total debt must be less than £5,000. Two or more creditors must be owed. Applications must be made individually. Shared applications are not allowed, even if there are joint liabilities. Spouses can sometimes split debt and apply individually for relief of part of the loans.
After qualifying, the N92 application form can be obtained from the county courts. All debt (totalling less than £5000) is to be declared on the form. An Attachment of Earnings Order will also be made. This can be declined if there are concerns about employer/employee relations. The Citizen’s Advice Bureau, Credit Action, CCS, and National Debtline can all offer individuals some assistance with the N92 form.
Once the application is approved, the process of repayment begins. There are a few cautions to remember. If payments to the court are not kept current, it may withdraw the order. In that case, creditors can seek immediate repayment of the full amounts owed. If the prearranged payments to the court are small, the process of repayment may take several years. Each creditor is entitled to object to the order. In that case, they may request to be excluded from the arrangement. The court may refuse the request.
Courts can also review the order upon request, and reduce payments if absolutely necessary. It is possible to make special allowances for certain circumstances such as job loss or bereavement. During repayment, the court will:
- Appoint a licensed insolvency practitioner to administer the payment process
- Decide upon a reasonable monthly rate based on the financial situation
- Collect the agreed-upon amount each month
- Disburse the specified monthly amounts to creditors , eliminating the need for any further personal contact
- Assess a10% administration/handling fee, so approximately 10p of every £1 paid will go to cover court costs
- Continue disbursements until all debts are paid in full
Upon completion, when the Administration Order is completely paid off, a Certificate of Satisfaction is issued. The fee for this certificate is around £15.00. Records of Administration Orders are kept on file for six years from the original date of the order. It is a good idea to send a copy of the certificate to credit reference agencies as proof that all debts are paid. When properly used and completed, an Administration Order is one way to reduce the stressful impact of a difficult situation.