An administration order (AO) is a formal and legally-binding agreement between the borrower and lender to repay your debts over a specified time frame.
The County Court issues and approves the administrative order, thus allowing you to pay what you can afford to pay every month towards paying off your credit card debts. You need to continue to make the payments the court has asked you to pay. In doing so, it legally protects you from your creditors.
If you are making regular payments to them, the creditors cannot take further action against you for the duration of the AO. The court ordered payment will be distributed among your creditors, which takes 10 percent administration fee.
For instance, the court has decided that you pay £10 each month to your creditors. Your creditors will receive £9 while the court will receive £1. This is not a better result for lenders as they would expect to receive in an Individual Voluntary Arrangement (IVA).
How Do You Qualify for the Administration Order?
To qualify for an administration order, you need to meet the following requirements:
You owe £5,000 and no more than that
You have an unpaid country court judgement or CCJ, including a traffic violation registered for enforcement in the Traffic Enforcement Centre at Northampton County Court
You have two or more outstanding debts
If you do not have a county court judgement and wish to obtain an administration order, wait for one of your creditors to file a lawsuit against you. You can apply for an administration order as soon as the court hands out its judgement.
What If You Owe More Than £5,000?
If you owe more than £5,000, you need to negotiate with your creditors to erase some debts from your record so you can opt for the administrative order. If the creditor thinks they can obtain more money with an administration order, they may agree to this.
What Type of Debts Does the Administration Order Include?
You cannot list a joint debt in your administration order. Even if you do list it as one of the debts you owe because an AO requires you to list all the debts you owe, the creditors can still go after the other person. To prevent this from happening, the other person also needs to file a separate administration order. Search a debt lender directory to make sure your lenders accept IVA’s and administration orders.
However, a creditor may object to be included in an AO, leaving it up to the district judge to determine what debts need to be included in it. In the case of rent arrears or mortgage, request the court to leave them out of the administration order.
Once you have paid all your debts, the administration order ends. Normally, you need to pay all your debts within three years if there is a composition order. The court will provide you with a Certificate of Satisfaction, costing you £15, as proof that you have repaid all your credits.
The AO will remain on the Registered of Judgements and Orders and Fines for six years. It will also appear on your credit file. However, the court will change the record to state that you have paid all your debts.