Introduction
Are you struggling with debt and unsure of how to manage your payments? This guide will help you understand administration orders, a legal arrangement that can assist you in repaying your debts in a manageable way. Discover who can apply for an administration order, how it works, and what steps you need to take. If you need additional support, Contend’s highly trained AI legal experts are here to provide guidance and help you navigate your legal issues. With Contend, you can find the easiest legal help in the UK.
If you’re struggling with debt and looking for a way to manage your payments, you may have heard of something called an administration order (AO). This is a formal agreement that can help you pay back your debts over time. Let’s break down what an administration order is, who can apply for one, and how it works.
What is an Administration Order?
An administration order is a legal arrangement that allows you to repay your debts in a manageable way. It’s approved by the court, which means your creditors have to follow the terms set out in the order.
To qualify for an administration order, you need to meet a few criteria:
- Your total debts must be £5,000 or less.
- You must have an unpaid county court judgment (CCJ) or high court judgment against you.
- You should have at least two debts.
If you don’t yet have a CCJ, you’ll need to wait until one of your creditors takes legal action against you. Once a judgment is entered, you can apply for an administration order.
What If My Debts Exceed £5,000?
If your debts are more than £5,000, you could try negotiating with your creditors to see if they would be willing to reduce some of your debt. Sometimes, creditors might agree to this if they believe they will recover more money overall through an administration order.
You could also explore getting help from charities or grant funds to pay off some of your debts. A useful resource for this is the Turn2us grant search tool.
Joint Debts and Administration Orders
If you have joint debts with someone else, it’s important to know that both parties are responsible for the entire debt. You cannot apply for an administration order together. If you include a joint debt in your application, the other person could still be pursued by the creditor unless they also apply for a separate administration order.
What Debts Can Be Included?
When you apply for an administration order, you need to list all your debts. While the law doesn’t exclude specific types of debt, creditors can object to being included in the order. Ultimately, it’s up to the district judge to decide which debts are accepted.
It’s advisable to leave out any mortgage or rent arrears from your administration order. This is because these types of debts can have different consequences. If you’re dealing with mortgage or rent arrears, check out resources on how to manage those separately.
How Are Repayments Managed?
Once your administration order is approved, the court will assess your financial situation to determine how much you should pay each month. You’ll make these payments to the court, which will then distribute the funds to your creditors.
If you find that you can’t pay back all your debts within a reasonable timeframe (usually around three years), you can request a composition order. This means you only pay a portion of the debt, and as long as you keep up with these payments, the remaining debt will be written off at the end of the period.
How to Apply for an Administration Order
To apply, you need to fill out the AO application form (form N92) and submit it to your local county court. There’s no upfront fee for applying, but the court will take 10% of your monthly payments to cover their costs.
What Happens When the Administration Order Ends?
An administration order lasts until you’ve paid off your debts and any associated court fees. If you have a composition order, it typically lasts for about three years. Once the time is up, you won’t owe any more money related to the debts included in the administration order.
At the end of the process, you can request a certificate of satisfaction from the court, which costs £14. Keep in mind that administration orders are recorded on the Register of Judgments, Orders, and Fines and will remain there for six years. However, once your order is completed, the court will update the record to show that it has been paid off.
Next Steps
If you’re considering whether an administration order is right for you, take the time to evaluate your financial situation and explore your options. You may also want to try Contend’s legal expert chat for advice. Contend’s highly trained AI legal experts will work with you to provide guidance and help you understand and resolve your legal problems.
Managing debt can be overwhelming, but an administration order could be a step towards regaining control of your finances.
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