Administration Order
An Administration Order has, over the years, been a useful weapon in the arsenal of the debt adviser but, since the introduction of the Debt Relief Order in 2008, it seems to have fallen by the wayside.
How An Administration Order Works
An Administration Order is a County Court Order designed to protect a debtor from legal action being taken against them by one of their creditors.
The order obligates all creditors to seek permission from the Court should they wish to take enforcement action for the recovery of a debt in the order.
The order requires all creditors to be treated with equality and in unison, thus removing the possibility of a precedence being given to one forceful creditor.
Application process
The debtor must apply for the order themselves and they must also have had at least one judgement against them for none payment of their debt.
The maximum debt level must not exceed £5,000 on application, though if it is found that the debt level rises above £5,000 it can still be allowable. The court will decide whether the applicant has knowingly abused the protection of the order.
After a financial assessment has been undertaken, the debtor will be required to make a monthly payment to the Court. The court will then deduct an administration fee from the payment of approximately 10%, before distributing to the remainder to the creditors on a pro-rata basis.
For individuals only
An Administration Order can only be given to individuals.
If there are joint debts in the list of creditors, then they can be included, but doing so will not remove the liability of the debt to the other party in which case they would have to seek their own solution to deal with their liability.
Not all debts can be included in an order. Social loans being one and overpayments of benefits being another, when the debtor is still receiving the benefit from which a deduction could be made.
Reviewing an order
An order can be reviewed at anytime by the Court, or at the request of the debtor or any individual creditor.
A review would normally be requested by the debtor if their ability to maintain payments was compromised and they were looking to reduce their payments.
A review request by a creditor would be to seek an Attachment of Earnings Order if there had been missed payments.
As a result of the review, the Court can decide to increase or reduce the payments as it sees fit. It could also suspend the payments altogether if circumstances suggested that was necessary, or make an attachment of earnings order for the amount due to be paid.
Revoking an order
If the debtor misses 2 consecutive payments or is regularly late with their payments the Court can demand a payment, an explanation, or a proposal for payment of the arrears. Failure to comply could lead to the order being revoked within 14 days.
If the order is revoked, then the debtor loses the protection of the order and creditors are free to pursue the debtor.
For more information on an Administration Order debt solution please read :-
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