Administration Order

An administration order (AO) is a formal and legal agreement between you and your creditors to pay back your debts over a period of time.The court and your creidtors will have to approve the legal debt solution and creditors have to stick to it.

What is an Administration Order?

An Administration Order is a legally binding administrative arrangement, issued by a County Court, that enables you to pay only what you can afford each month towards your credit debts.

 You make 1 payment a month to your local court. The court will divide this money between your creditors. Creditors listed on the administration order cannot take any further action against you without the court’s permission.

What is a Composition Order?

If it’s unlikely you’ll be able to pay the debt in full within a reasonable time, the court might agree to grant a Composition Order.

This Order allows you to pay back part of what you owe and the rest of your debt is wrote off.

Administration order eligibility

    • have at least two debts
    • owe under £5,000 in total
    • have at least one debt that is a County Court Judgment or Higher Court Judgment against you
    • can afford to make regular payments towards your debts – this can be as little as £1 per debt.

If your debts total more than £5,000 you could try negotiating with your creditors to write off some of the debt to bring the total debt within the administration order limit. A creditor may agree to this if they think they’ll get more money back overall with an administration order.

Alternatively you may be able to apply for help from a charity or grant fund, so you can pay off some of your more pressing debts to bring you below the £5,000 limit.

How do I get an administration order?

Get in touch for advice and we will help you with your application form and return it to your local court.

Once it’s sent off, the court decides:

  • how much of your debt you have to repay, for example, all or just part of it
  • what your monthly repayments will be
  • how long the arrangement lasts

The arrangement is known as a ‘composition order’ if you cannot pay all your debts.

For more information or to discuss a debt management plan and also any other debt options available to you, please get in touch.

After an administration order

An administration order lasts until the debts are cleared and the court fees paid. If there is a composition order, there will be a time limit on how long you pay for, usually three years. At the end of that time, you no longer owe the debts in the administration order.

At the end of the AO, you can ask the court for a certificate of satisfaction which costs £15.

Administration orders are entered on the Register of Judgments, Orders and Fines and stay on the register for six years. This information also appears on your credit file. The court will change the record on the register to say the administration order has been paid off.

Asking the court to leave rent or mortgage arrears out of the AO

When you apply for an administration order, you must list all your debts on the application form. However, you can ask the court to leave a particular debt out of the AO if you have a good reason. Any creditor can object to the AO, but it is up to the district judge to decide if any debts are left out. A debt that you want to exclude from the order will still count towards the £5,000 total.

Rent arrears

You can include your rent arrears in an administration order but this doesn’t stop a landlord from getting possession of the property.

What debts can I include in the AO?

Unfortunately, the Administration Order legislation does not clarify which debts can and can’t be included in the arrangement.

Whilst the treatment of unsecured debts is reasonably consistent, different courts will have different practices regarding the inclusion of secured debts, fines and priority debts differently.

How much does it cost?

The cost of the Administration Order depends on how much the court decides you can reasonably afford to pay towards your credit debts each month.

This is the amount you have leftover each month after all of your essential living costs and priority debt repayments have been accounted for.

The court will take a 10% administration fee from every payment that you make before distributing the balance to your creditors. For example, if the court decided you could afford to pay £200 each month towards your credit debts then the court would receive £20 and your creditors would receive £180.

Get debt advice

It’s always best to talk things through with an experienced debt adviser before you decide any debt solution.

Over eight out of ten people who have got debt advice tell us they feel less stressed or anxious and more in control of their life again.

A debt adviser will:

  • treat everything you say in confidence
  • give advice about better ways of managing your money
  • never judge you or make you feel bad about your situation
  • suggest ways of dealing with debts that you might not know about
  • always be happy to talk to you, however small or big your problem is
  • check you have applied for all the benefits and entitlements available to you.

For more information or to discuss a debt management plan and also any other debt options available to you, please get in touch.

Your responsibilities

You must keep up your repayments or the court can:

  • ask your employer take money from your wages – known as an ‘attachment of earnings order’
  • cancel the arrangement

You may still be able to keep your business running, if you have one.

Administration Order & Public records

You will find your administration order is visible to the Register of Judgments, Orders and Fines.

  • It’s often removed 6 years after the date of the order.
  • After this time, you will get a mark of ‘satisfied’ if you repay your debts in full.
  • You can also ask the court for a ‘certificate of satisfaction’. To do this, write to the court and send a cheque for £15 (made payable to Her Majesty’s Courts and Tribunal Service).

Finding the right debt solution for you

If you’ll save on interest and fees over the course of a consolidation loan, then it may be a good option for you. If it looks like you won’t save on interest and fees over the course of the loan it may be worth considering whether the benefits justify the extra cost.

However, don’t worry if you can’t find the right consolidation loan for you. There are more options available to help you with your financial debt.

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