An administration order is a county court order that helps you deal with a small number of debts once a creditor has already taken you to court. You make one monthly payment to the court, and the court shares it out between the creditors listed in the order. While the order is in place, those creditors can’t take any further action against you without the court’s permission.
Administration orders are for individuals in England and Wales. They’re a different thing from company administration, where an insolvency practitioner takes over an insolvent business. If that’s what you’re looking for, see GOV.UK’s guide to putting your company into administration. Northern Ireland has its own administration order procedure (see below).
This guide explains who can get an administration order, how to apply and what happens next.
Why would you need an administration order?
An administration order can help if a creditor has got a county court or High Court judgment against you and you can’t pay it in full, and you have other debts as well. Instead of juggling several creditors, some of whom may be taking enforcement action, you make one affordable payment to the court.
It gives you:
- one monthly payment, set by the court according to what you can afford
- protection from further action by the creditors listed in the order, unless the court gives them permission
- the chance to repay only part of what you owe, if the court makes a composition order (see below)
Who is eligible for an administration order?
In England and Wales you can apply if you:
- have an unpaid county court or High Court judgment against you, which you can’t pay in full. This is a requirement, not a bar. If none of your creditors has taken you to court yet, you can’t apply until one of them has a judgment against you.
- owe money to at least 2 creditors
- owe no more than £5,000 in total, including the judgment debt and any interest and charges. The legal limit is “not exceeding” £5,000. GOV.UK puts it as “less than £5,000”.
- can afford regular repayments, which you show by giving details of your income and spending
If your debts are over £5,000, you can’t get an administration order. A free debt adviser can talk you through other options, such as a debt relief order or a debt management plan.
How do you get an administration order?
- Fill in form N92 (application for an administration order). List all your debts and creditors, plus your income and outgoings.
- Send or take it to your local county court.
- The court tells each creditor you’ve listed. A creditor can object, for example to being included.
- The court decides whether to make the order and sets the terms (see below).
- You pay the court each month, and the court shares the money out between your creditors.
What the court decides
There’s no standard length for an administration order and no automatic write-off after a fixed number of years. The court decides:
- how much of your debt you have to repay, all of it or just part of it
- how much your monthly repayments will be
- how long the arrangement lasts
If you can’t afford to repay everything within a reasonable time, the court can make a composition order. This means you repay only part of what you owe, and the rest of the debts in the order are written off once you’ve kept up the payments for the set period.
If you don’t keep up your repayments, the court can cancel the order or make an attachment of earnings order, which means money is taken from your wages.
Also Check: Can the government help with my debt in the UK?
What it costs
There’s no fee to apply. Instead, the court takes a fee each time you make a payment, and the total can’t be more than 10% of your debt. For example, if you owe £5,000, the total fee can’t be more than £500.
Advantages
- One payment: you make one monthly payment to the court instead of paying several creditors.
- Protection: creditors listed in the order can’t take further action against you without the court’s permission.
- Affordable terms: the court sets payments based on what you can afford, and may write off part of the debt through a composition order.
- Low cost: no application fee, and court fees are capped at 10% of your debt.
Disadvantages
- Credit record: the order goes on the Register of Judgments, Orders and Fines and is usually removed 6 years after it was made. Lenders will see it on your credit file.
- Strict limits: you need a court judgment against you and debts of no more than £5,000, so it suits only a small number of people.
- Missed payments: if you fall behind, the court can cancel the order or have money taken from your wages.
- Court fees: up to 10% of your debt goes on the court’s fee.
Which debts can be included?
You must list all your debts on the application. The law doesn’t automatically exclude any type of debt, but a creditor can object to being included, and the judge decides whether any debt is left out. A debt that’s left out still counts towards the £5,000 limit.
Debts commonly included are credit and store cards, overdrafts, personal loans, payday loans, catalogue debts and arrears of energy bills or council tax. For ongoing bills such as council tax or energy, only the arrears go into the order; you must keep paying the bills as they fall due.
Secured debts are different. Mortgages and logbook loans are secured debts: the lender has a legal claim over your home or vehicle, and an administration order doesn’t remove that. If you have mortgage or rent arrears, it’s usually best to ask for them to be left out of the order and deal with them separately, because those lenders and landlords can still act to protect your home. Get advice before applying.
Northern Ireland and Scotland
Northern Ireland has its own administration order procedure. According to nidirect, it can help if your debts are £5,000 or less and you can afford regular payments, and you apply through your local county court. The rules differ from England and Wales, so check nidirect’s guide to debt repayment options or speak to a free debt adviser in Northern Ireland.
Scotland doesn’t have administration orders. Scottish residents should look at the Debt Arrangement Scheme and other Scottish debt solutions on mygov.scot.
When is an administration order the right choice?
An administration order may suit you if you have a judgment against you, total debts of no more than £5,000 and enough income to make regular payments. If your debts are higher, you have no spare income, or no creditor has taken you to court, another option is likely to fit better.
Before applying, speak to a free debt advice organisation. Other options, such as a debt relief order, an Individual Voluntary Arrangement or a debt management plan, might suit your circumstances better.
Final Thoughts
An administration order is a court-run way for people in England and Wales with a judgment against them and debts of no more than £5,000 to repay what they can afford through one monthly payment. The court sets the amount, the length and whether any debt is written off. There’s no standard five-year term.
It will show on your credit file for 6 years, so get free debt advice first to make sure it’s the right option for you.
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People also asked...
Obtaining an administration order could result in the discharge of a portion of your debt. The term for this is composition order.
The administration order will be deleted from the Register, and your credit reference file will be deleted after six years have passed. This signifies that your credit rating will no longer be impacted when you reapply for credit. Upon complete payment of your debts by the administration order, you may petition the court to issue a certificate of satisfaction.
Creditors listed in the order can’t take further action to recover those debts, including enforcement, without the court’s permission. Debts left out of the order, and secured lenders acting on their security, aren’t covered, so get advice if you’re contacted about them.
There’s no standard length. The court decides how much you repay, how much each payment is and how long the arrangement lasts. If you can’t repay everything within a reasonable time, it can make a composition order so you repay only part of the debt.
This process is specifically formulated to aid individuals who are insolvent and have a source of income from which they can repay modest amounts of debt gradually but have few if any, assets. It is a practical procedure that is only applicable in minor circumstances.