The administration order

An administration order is a way to settle debts if you have county court or High Court judgment ruling against you and you cannot pay off your debts in full. But who is entitled to an administrative order and what debts are included?

An administration order is an order made by the court at the request of a person whose debts do not exceed £ 5,000 and who is unable to pay those debts in full at once, but who can if they are grant a delay.

An administrative decision allows the debtor to repay his debts in monthly installments, while establishing a "moratorium" (which is a suspension of payment) on the execution of claims by the creditors of the individual. As long as the ordinance is in force and the debtor pays the required monthly payments, no creditor may initiate proceedings or exercise any other remedy in respect of any of the debts covered by the ordinance.

Who is eligible for an administration order?

There are conditions to be met to be eligible for an administration order: On the one hand the debts of the individual must not exceed £ 5,000 and on the other hand, there must be at least one judgment of the county court in course and not satisfied. Finally, the court will not approve the decision if the debts cannot be repaid within a reasonable time which is usually set at 3 years.

What debts are included in an administration order?

All debts of the individual may be taken into account in an administrative order, including secured debts which are not expressly excluded under section 112 of the County Courts Act 1984. The £ 5,000 threshold means that a debtor with mortgage debt will rarely be able to get an administrative order. Indeed, all of his debt is very likely to exceed the limit of £ 5,000.

How much does an administration order cost?

An administrative order provides that the debtor must pay a fixed sum each month to the court. The court administers the payments and distributes the amount among the creditors equally. It should be noted that it keeps 10% of the monthly payment to cover his management costs.

There are no legal costs to be paid by the debtor. The total that the debtor will pay is its full liability to its creditors plus the 10% mark-up.

How to apply to an administration order?

To apply for an administrative order the debtor must complete the prescribed form N92 and then file it with the court for decision. The application form must be sworn or confirmed before a court officer. The debtor must also provide a copy of the pending judgment(s).

He must communicate all the details of his financial situation, in particular:

  • Income
  • Assets
  • Outgoings and liabilities, including full details of every debt and the obligatory judgment debt
  • Full details of employment
  • Dependants
  • Property

The debtor can make an offer to pay or leave it to the court to determine the level of the monthly payments. 

If the court decides to make an administrative order, it will determine the amount of each monthly payment and then inform all the creditors, who then have 16 days to oppose the decision or contest the value of the monthly payments. 

If no objection is raised, the administration order will be issued, served on all interested parties and entered in the register of judgments, fines and orders.

The debtor then makes the monthly payments until all debts and court fees are paid. In some cases, the court can order that the monthly payments be deducted at source from the debtor's salary. The debtor can oppose it if he undertakes to make the monthly payments voluntarily.

However, if a creditor objects to the decision within the 16-day period, if the court cannot determine the amount of the monthly payments or if he is not satisfied with the information given in the notice of request, it will enter the case for a hearing.

A creditor can ask to be excluded from the administrative order. The matter will be considered by the court, which can accept it, but the obligee will therefore not be able to take legal or enforcement action to collect its debt without the prior authorization of the court.

A creditor can ask to be excluded from the administrative order. The matter will be considered by the court, which can accept it, but the obligee will therefore not be able to take legal or enforcement action to collect its debt without the prior authorization of the court.

If the debtor does not pay his monthly payments, the court can order the bailiff to enforce the assets, make an order for the seizure of income or may revoke the administrative order. It thus allows creditors to take their own steps to collect debts.

At the end of the administration order, the debtor can ask the court for a "certificate of satisfaction" which costs £ 15. 

Administrative orders are an effective way to protect a debtor with a relatively low overall debt level from performance by creditors, while ensuring that all debts are repaid, albeit over time. If you are concerned by this situation, do not hesitate to seek advice from a commercial lawyer.

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