Administration Order FAQs
AN Administration Order is a formal debt solution available to people with debts of £5,000 or less.
Being a formal solution, the Administration Order legally protects the applicant from creditors taking enforcement action against them by requiring the creditor to seek the permission of the Court before legal action can be taken.
Administration Order Frequently Asked Questions
Here are the most frequently asked questions relating to Administration Orders.
What is an Administration Order?
An Administration Order is a Court Order which protects a debtor from their creditors by restricting enforcement action. It requires the creditors to seek permission from the Court before they can take any action.
Once an order is in place, it is unlawful for a creditor to approach the debtor for a direct payment towards the debt and all interest charges relating to the debt is frozen.
Back to FAQsHow long does a Administration Order last?
An Administration Order remains in place until the whole debt has been repaid.
This means the term of an Administration Order will vary depending on the size of the debt and the amount that is being repaid each month, but it is generally accepted that the repayment term should not exceed 3 years.
How long to apply for an Administration Order?
Once creditors are given notice of the proposed order they have 14 days to object to it. If no objections are received, the 'Final Order' will be made, but if there are objections then a court hearing will be set for the objections to be heard.
Back to FAQsWho can apply for an Administration Order?
Only people with debts of £5,000 or less can currently apply for an Administration Order.
They must have also have had a judgement against them, be it a County Court Judgement or, alternatively, a judgement from the High Court.
Back to FAQsHow much will I pay each month?
Payments into an Administration Order will be set to what is deemed affordable after all essential living costs have been taken into account.
Payments have to be of a reasonable level though, as they will need to be able to clear the debt within a reasonable time. This is generally considered by the Court to be 3 years.
Back to FAQsWho pays the costs for an Administration Order?
All charges are paid for by the debtor. The court charges an administration fee for the work it does in distributing the debtor's payments. This fee is deducted from the debtor's contribution, and is normally 10% of the payment.
This fee reduces how much the creditors are receiving each month and will, therefore, lengthen the repayment term.
Back to FAQsWhich is best: Administration Order or Debt Relief Order?
A Debt Relief Order helps people with debt levels of up to £15,000 and has a duration of just 12 months. It has a 'one-off' administration charge of £90, payable to the Official Receiver, and requires no further payments to be made for the repayment of the debts. After 12 months the debts are written-off.
In contrast, an Administration Order can only deal with debts of £5,000 or less, requires payments every month to enable the debt to be repaid within 3 years or so, and doesn't offer debt forgiveness as standard.
Not everybody will qualify for a Debt Relief Order, but if your circumstances qualify you, that would be the obvious choice.
Back to FAQsWill an Administration Order write-off any debt?
Not as a standard benefit.
However, if the Court can see the Administration Order will take significantly longer than 3 years to repay your debt, based on current affordability, a district judge can put in place a 'Composition Order'.
What is a Composition Order?
A Composition Order can be used to replace an Administration Order when an Administration Order is unable to repay the full debt within a 'reasonable' repayment period, generalised to 3 years.
A Composition Order can do this by allowing some of the original debt to be written-off.
The payments run for a fixed period of 3 years, and each creditor has to accept a proportion of their debt will remain unpaid as a result. Because the repayments are distributed on a pro-rata basis, each creditor must accept a pro-rata debt write-off.
Back to FAQsWhat if I can't pay my Administration Order?
If you are struggling with your payments, you can request a review of your Administration Order by writing to the Court. During a review, your circumstances will be reassessed and, if necessary, the Court has the discretion to reduce your payments.
Back to FAQsWill an Administration Order affect my credit rating?
As is the same with all debt solutions, an Administration Order will damage your credit rating for a period of 6 years from the date it starts.
Back to FAQsWill I need to open a new bank account?
Yes, the chances are you will have to change your bank account. The good news is that changing banks is not as difficult as it sounds, and can be done relatively smoothly.
Back to FAQsGet A Professional Opinion
You should speak to a professional debt adviser if you're experiencing financial problems. We take debt seriously, and there's not a debt problem too big or too small for us to deal with. So why not give us a call on 0800 088 7502.
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