Administration orders

• Advantages of an administration order
• Disadvantages of an administration order

If you have multiple debts, you can apply to a county court in England and Wales for an administration order as a means of getting the county court to take over the administration of your debts.1s112 County Courts Act 1984; CCR 39 This is a little used but extremely useful, provision whereby the court will decide how much you can afford to pay to each of your creditors. You make one monthly payment to the court, which then pays your creditors on your behalf.

To be able to obtain an administration order:

•you must have a county court or High Court judgment against you; and
•the total of your debts must be less than £5,000; and
•you must have at least two debts.

Administration orders are not available in Scotland.

Importantly, the court can reduce the amount of overall debt paid by order so that only a percentage of the total debts are to be paid – eg, ordering that the debtor pays into the administration order 25p for each £1 owed. So, a person with total debts of £4,000 would only be required to ultimately pay back £1,000 under the administration order.

In terms of fuel debt, the making of an administration order by a court must be the definitive statement of your ability to pay. Suppliers who seek to recover arrears outside the terms of the administration order could find themselves in contempt of court.

Suppliers, however, are not used to people putting their debts into administration orders. Always contact your supplier in advance to explain your proposed course of action. You also need to make arrangements to pay for your current supply. The supplier will almost certainly insist that you pay using a method which offers the supplier greater security, such as a prepayment meter, Fuel Direct or a payment plan using direct debit. The supplier is not permitted to recover arrears through any of these methods of payment without the leave of the court, since the court will take over the payment of arrears.

Apply for an administration order on Form N92 available from your local county court or gov.uk. There is no upfront fee to apply.

The court contacts your creditors and either makes the order by agreement or arranges a private hearing with a district judge to consider your application. In practice, few creditors bother to attend a hearing for an administration order, and in many cases, they may write off the debt completely at this stage.

The court has powers to cancel or vary the administration order once it is granted, if you fail to pay. However, if you do encounter payment problems, contact the court immediately to seek a variation of the order.

 

1     s112 County Courts Act 1984; CCR 39 »

Advantages of an administration order

•The order usually runs for three years, although this is not automatic (check with the court). Provided you have paid your monthly payments, the rest of the debt is written off at the end of this period.
•Interest is frozen on accounts.
•Your creditors cannot chase you or take other court action against you while the order runs.
•You have to make only one payment each month.
•The court can reduce the amount of each debt owed by requiring only a percentage of the debt to be paid.
•It is possible for a charity or a third party to pay off the amount owing under the administration order in a lump sum.

Disadvantages of an administration order

•Your name appears on a register of court orders and you may find it hard to get credit.
•There is a court fee each time you make a payment. This cannot be more than 10 per cent of your debt – eg, if you owe £4,000, the total fee must be a maximum of £400.