Published in Debt Solutions Guide on Wednesday, July 04 2007

First of all what is an Administration Order? It is a court order which covers all your unsecured debts, this means you make one payment and the court will distribute it for you to all your creditors.

There is a charge for this – the court will retain 10% of your payment for the administration costs. They take this directly from your payment.

The reason why this may help you in managing your debt situation is because under the terms of an Administration Order your creditors are not allowed to take any action against you, including turning up at your property demanding money, sending you letters demanding payment, and any other debt collection procedure. This may relieve a lot of intense pressure that creditors tend to put on you, and also give you a manageable payment to make regularly. Often when creditors are demanding money from you they refuse to negotiate properly and won’t take into account what your outgoings are, be it to other debts or even household expenses. Obviously they should do this, but I’m sure as many have you have seen they are not always willing to be reasonable!

You have to apply directly to the court for the Administration Order, and you will need to complete form N92, which can be obtained from your local court office. To apply for an Administration Order however you do have to meet certain criteria. These include having at least one County Court Judgement or High Court Judgement registered against you, having at least two different creditors and the total amount of your debts must not exceed £5000.00.

When completing the form N92 you must include all your debts, whether they are just in your name or not. If you do have any joint debts you must list the total amount of the debt. You cannot do a joint Administration Order and so if the other individual wishes to also do an Administration Order , they must apply separately. If you both make an application to the court for your Administration Orders at the same time the court may agree to divide the debt between you equally, otherwise if you do a single application you are technically liable for the full amount of the debt, although presumably the third party could make some payments towards it. This could still benefit you as it does stop this creditor from hassling you at least and give you a manageable payment still.

Usually the court takes the payment from your wages via an Attachment of Earnings for employed individuals. However if you didn’t want your employer to know about it you can specify on the N92 form that you do not wish to pay it this way. You must maintain payments into the Administration Order for it to be affective. You will be asked to complete an income and expenditure so hopefully your payment should be at a manageable rate each month, however if it wasn’t or became unmanageable for a particular reason or because your circumstances changed you can apply for to court with your reasons and have it adjusted to a reasonable amount. However if you just missed payments the court can revoke the order, and the creditors would be entitled to pursue to for the full amount of the debts outstanding.

Once you have completed the Administration Order, that is when all the debts are paid off you can obtain a Certificate of Satisfaction to say you have completed it, and there is a charge of ten pounds for this certificate. The Administration Order will be recorded on your credit file, and could adversely affect your credit score, however if you are struggling with the debts anyway then it is already likely to be affected.

You can only get an Administration Order if you live in England or Wales currently. You can also apply to the court to pay your debts over a reasonable amount of time. The court may usually do this over a three year period. This is known as a Composition Order. You would normally apply to the court whilst actually in the Administration Order for this. If you are on a low income, for example on benefits, a lone parent, elderly, or disabled or sick the Judge will consider it. Sometime they may suggest it at a review of your Administration Order after the first year. They will set down the time you will pay the debt off for and then the rest of the debt will be written off.