When you are having problems paying off your debt
but you only have around £5,000 worth of debt between at least two creditors and one county court or High Court judgment against you, you could qualify for an administration order. An administration order is a single county court order that covers all of your credit debts and other debts as one and allows you to make a single payment on them every month via the court. It is similar to an informal debt management plan except it protects you from creditors being able to take any further action against you.
There are numerous advantages of having an administration order in place with the courts.
For one thing, none of the creditors you list on the order can take any action against you without first getting permission from the court. They cannot send debt collectors, letters, or call you requesting payment once the administration order is in place. All interest and other charges that were being added to your account are stopped, keeping the debt from increasing. There is no upfront fee for the administration order. Instead, the court will take a handling fee of ten pence for every pound you pay over the length of the administration order. In other words, you will pay approximately 10% of your total debts in handling fees which the court deducts from your payments to the court.
If you should happen to be paying on a small amount each month to your creditors because that is all you can afford, an administration order could take years to pay off. In order to keep that from happening, you can also request a composition order the same time as you request an administration order. A composition order allows you to pay off a portion of your debts total over a three year period. The court should consider a composition order when you make an administration order in order to see if it would be a more appropriate solution to your debt repayment needs. If you not apply for a composition order right away, you can apply for it separately after your administration order is in place.
- To apply for an administration order you simply need to get the form from your local county court office, fill it out, and turn it back in. You will be asked quite a bit of financial information on the form, such as details of your mortgage, information on savings and checking accounts, weekly and monthly outgoing costs, and, of course, a list of all your creditors. You will need to include things such as your mortgage and other bills, but you should make it clear that you made separate arrangements to pay those. There is an area where you can tell the courts how much you can afford to pay, so make sure you fill this out as honestly as possible. If you are on income support, you can offer to pay as little as £5.00 a month. Make sure you do not sign the form until your hearing as it needs to be signed before a court officer.
Take to court with you statements and letters from your creditors showing them proof of your debts. Once the application is turned in, the courts will inform your creditors that you have filed for an administration order and they then have 16 days to inform the courts whether or not they have an objection to the order. Any of DebtReductionServices advisors can help you with this process.