An administration order (AO) is a legal debt solution, approved by the court, which your creditors have to stick to.
To get an AO you must have:
- an unpaid county court judgment (CCJ)
- debts that are no more than £5000 in total
- at least 2 debts.
If your debts are over £5000
To bring your debt level within the administration order limit you could ask your creditors to write off some of the debt. They may agree if they think they’ll get more money back through an administration order.
Which debts are included in administration order?
If you’re behind with mortgage or rent payments it’s usually advisable to ask for these to be left out of the AO. Ultimately it will be up to the court to decide whether they’re included.
Rent arrears can be included, but a landlord could still get possession of the property. You may want to come to an arrangement with your landlord outside of and before any Administration Order.
Some courts will include the total value of the mortgage as your debt, which would likely you above the £5000 limit for an AO. You may want to agree a separate repayment arrangement with your mortgage provider before applying for an Administration Order.
This can get a little tricky as each person is responsible for paying back the full amount of a joint debt, and you can’t take out a joint Administration Order with the other person. So if you include a joint debt in an AO, the other person could still be chased for the debt.
How do the repayments work?
Your repayments will be based on your financial situation and what you can afford. The court will go through the debts included in your application, and your income and expenses, and tell you how much you have to pay each month. Your payments go to the court each month, who then distribute the money to your creditors.
How do you apply?
Complete the AO application form (form N92) and take it to your local county court.
How much does it cost?
The court keeps 10% of your monthly payment to cover their costs, but there’s nothing to pay up front.
At the end of an administration order
An administration order lasts until the debts are cleared. At this point you can ask the court for a certificate of satisfaction which costs £15.
Administration orders appear on your credit report for 6 years.