An administration order is a formal, legally binding agreement between a person and the people and companies they owe money to (also known as creditors).
It’s a debt solution that offers a way to pay back debts over a period of time in using affordable payments.
How long does an Administration Order take?
As long as none of your creditors object to the arrangement, it usually takes between four and six weeks for an Administration Order to be set up.An administration order is a debt solution available if you are struggling to repay the total amount of your debts. You must have one or more county court judgments (CCJ) or high court judgments against yourself to be eligible.
To sign up for an administration order, you must send an application form to the local county court where it will be reviewed by the court. The order will only be granted if it’s deemed suited to your circumstances and can only be granted with the court’s permission.
If the administration order is approved, debt and all relevant creditors listed on the application form will be included in the agreement.
You’ll then make a single monthly payment you’re able to afford towards all the debts. This is split between the creditors, no matter how many you owe money to.
An administration order is legally binding, which means that people and companies included in the agreement can’t take further action during the administration order without the permission of the court.
Administration orders are managed by the local court.
That means the court will decide how much money will be repaid, the size of monthly instalments and the length of time it will take to complete the administration order.
You’ll be charged a court fee every you make a payment but it’s important to be aware that the fee cannot be more than 10% of the total amount owed. That means if you owe £4,500, for example, you won’t pay more than £450 in fees.
You’ll keep paying for as long as it takes to pay your debt. At the end of the administration order, you’ll pay £15 for a Certificate of Satisfaction – this proved you have finished paying off what you owe.
To receive the certificate you must write to the court with a cheque to Her Majesty’s Courts and Tribunal Service
If you cannot pay in a reasonable time during your administration order, a district judge can suggest you consider a composition order. This will put a time limit on your repayment timeframe and writes off some of your debt.
Falling behind on payments could lead to an attachment of earnings order that allows the court to take money directly from your wages or cancel the arrangement.
You need to meet certain criteria if you want to apply for an administration order.
To be eligible you must:
While all types of debts can be included in an administration order, there are some exceptions to be aware of.
A judge may leave out some debts, these are likely to be council tax arrears or criminal fines. A creditor can also object to being included in the administration order and ask the court to leave them out. The court will decide it’s fair to leave them out or not.
It’s also important to keep in mind that while an administration order can include any mortgage or rent arrears the order won’t prevent a landlord or mortgage lender from repossessing your home.
It was literally the best decision of my life, and it has actually changed my life, cheesy as that sounds, it has changed my life.
Paige , IVA Customer
If you’re unable to make regular payments in a reasonable time during the course of your administration order (usually three years), the court might grant a composition order.
A composition order allows you to pay back a portion of what you owe each month rather than a payment each month that would eventually see you pay back your debt in full.
For example, if you owe £2,000 but can pay £12.50 per month it would take you more than seven years to pay back the full amount. With a composition order, your payments would be based on your affordability. So in this instance, if you could afford £12.50 you’d make that payment for three years then the remaining debt would be written off.
As with most types of debt solutions, any application for an administration order will appear on your credit file and affect your credit score.
The administration order will appear on the Register of Judgements, Orders and Fines for six years and will have a negative impact on your credit score during this time.
A mark on your credit file and a lower credit score can make it hard to get credit in future. However, it’s important to remember that if you’ve entered into an administration order because of a County Court Judgement your credit score will already be negatively affected so you shouldn’t let that put you off considering it as a solution.
If your circumstances change during an administration order, it’s important you tell the court immediately.
You can ask the court to review the administration order and lower your monthly payments or ask to consider a composition order which will write off some of your debt.
If you miss two payments in a row the court has the right to revoke, or cancel, the administration order. If this happens your creditors are permitted to contact you again, to chase for payments, add backdated interest and begin enforcement action against you.
If this happens you should contact your creditors as soon as possible to arrange a payment plan as soon as possible.
You'll make a single monthly payment that will be split amongst your creditors
Creditors listed in the administration order can't take action against you without the court's permission
You will reduce your stress levels knowing you don't need to juggle several debt repayments
You'll be free of the debts included in the administration order at the end of the arrangement
It's only available if you have at least one CCJ against you and have less than £5,000 of debt
You'll pay 10% of your debt level as a fee
Falling behind on payments could lead to an attachment of earnings order that allows the court to take money directly from your wages or cancel the arrangement.
It will negatively affect your credit score for six years
Administration orders can help those who cannot pay debts in full but are not the only debt solution available.
If you’re worried about your financial situation and covering the costs of all your debts it’s vital you seek professional debt advice.
Find out all the benefits of the debt help available by speaking to an expert today.
Because of the implications on things like your home, car, and your credit rating, bankruptcy should always be considered as a last resort. That said, if you’re struggling with serious debt you can’t repay, it might be a useful option for you. At Your Debt Expert, we’ve helped thousands of people deal with their unsecured debt. We can offer you free advice and guidance based on your situation, and make sure you find the debt solution that’s best for you.
Advice and support is also available at Money Helper.
*A debt write off amount of between 25% and 75% is realistic, however, the debt write off amount for each customer differs depending on their individual financial circumstances and is subject to the approval of their creditors. The example provided has been achieved by 10% of our IVA customers in the last 12 months.
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This website is in no way approved by the Government. The product (IVA) we administer through the group and process with our Insolvency Practitioners is covered under the following legislation: The Insolvency Act of 1986 (amended by the Insolvency Act 2000 and the Enterprise Act 2002) introduced a new procedure whereby a debtor could come to an arrangement with their creditors to pay their debts in full or in part over time as an alternative to bankruptcy. Our advisors will go through all your debt options including IVA (Individual Voluntary Arrangement) opportunities which are available for people living in England, Wales and Northern Ireland. Help can only be offered following an initial fact-finding process. An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Initial advice is free and there is no obligation to proceed into an arrangement. Arrangement fees will be clearly explained to you in writing by your advisor.