This fact sheet covers England & Wales. You will need different advice if you live in Scotland.
Use this fact sheet to:
- understand if you can apply for an administration order;
- find out what an administration order does;
- help you to fill in an N92 application form for an administration order; and
- help you to make a court application (a ‘composition order’) to pay less than the full amount of your debt.
What is an administration order?
An administration order is a court order which stops further action by creditors whilst you make payments to court. You will make a single payment every month into the court. The court staff will then divide the money amongst your creditors on a pro-rata basis.
Advantages of an administration order
Whilst an administration order is in place, none of the creditors listed on it can take any action against you without first getting the court’s permission. Visits from debt collectors, letters or phone calls from your creditors should stop once the administration order is in place.
Having an administration order can save you a lot of time and trouble as the court deals with your debts on your behalf.
Any interest and other charges that were being added on to the debts are stopped.
It can also save you money if you were spending a lot on postage or on bus fares to make your payments.
You do not have to pay a fee up front to the court for an administration order. The court will take a handling fee of ten pence out of every pound you pay in over the time the order lasts. This means the handling fee is 10% of your total debts. The fee is deducted from your payments into the court.
If you apply for a composition order at the same time as you apply for your administration order, then the amount of time you make payments for is limited, usually to three years. See the later section What is a composition order?
If you need time to get debt advice and find a debt solution, you may want to consider applying for breathing space.
Breathing space will stop most types of enforcement and also stop most creditors applying interest and charges for 60 days.
To find out more, see our Breathing space fact sheet.
Who can apply?
You can get an administration order if:
- you have at least two debts;
- you have at least one county court or high Court judgment against you; and
- the total of your debts is less than £5,000.
If you have received a parking penalty or congestion charge, you might be able to use this to apply for an administration order. Contact us for advice about doing this.
How do I apply?
- You apply for an administration order on an N92 form which you can get from your local county court office. It comes with some notes to help you complete it.
- Put the name of your local County Court on the form. This may be a different court to the one in which your creditors have taken you to court.
- PART A of the application form asks for details of your family and employment circumstances and details of your financial situation. This is similar to Your budget and you can simply transfer the information on to the ‘statement of means’ form, using the spaces marked other for expenses that aren’t listed elsewhere.
- You need to fill in details of your bank accounts and savings. The form also asks for details of your mortgage and how much your house is worth.
- You also need to fill in your weekly or monthly outgoings under the section ‘regular expenses and arrears’ in PART A. List your regular payments in column (a). If you are in arrears with any of your priority debt payments, put the total amount you owe in column (b). It is important to show how much you are paying off the arrears in column (c). So, for example if you have made an arrangement to pay your rent arrears at a set amount each week, this figure should go in to column (c).
- PART B of the application form asks you to list your debts in the ‘list of creditors’. You should list them all; arrears on priority debts as well as the total credit debts, but make it clear if you have separate arrangements to cover your priorities. Contact us for advice.
- Quote the account number, and the creditor’s address to which the court can send your payments. If your creditors have passed the debts on to a solicitor or debt collection agency give this address for payment.
- In PART C of the application form, complete the box saying what you can afford to pay, otherwise the court staff will decide for you. You can get an idea of how much you can afford by looking at what is left, once you have paid your monthly expenditure, on Your budget.
- If you are getting a benefit, or on a low income, you may have to offer a very small amount each month if that is all you can afford to pay.
- Take statements or letters from your creditors with you as the court may want to see proof of your debts. They will also want a copy of any county court or high Court judgments you have listed.
- Keep a copy of your form in case there are any problems.
Don't sign the form yet
Do not sign PART D ‘declaration’ on the form at this stage. This is because you will need to take it to the court yourself and sign the declaration in front of a court officer, to say that the information it contains is true to the best of your knowledge. The court officer may go through the information you have put down, and query anything that is not clear.
After I have handed in my application
Once the court has accepted your application form they will inform your creditors that you have applied for an administration order.
Your creditors then have 16 days in which to tell the court of any objections that they may have. They may think the offer you are making is too low, or they may disagree with the amount you say you owe.
Your creditors can also ask the court to leave them out of the administration order. Priority creditors such as mortgage, rent, gas and electricity are likely to object because they want to make separate arrangements.
If no objections are received within the time, and the court staff and district judge are happy with what you have offered, then the order will be made. Provided you pay what you have offered, the creditors can take no further action.
You must attend the hearing. If you cannot go, you should write to the court explaining the reason why and ask for a new date.
If there are any problems at all, the order should not be refused without a court hearing. A hearing should be arranged at court for you to go to and a district judge will consider your application. This hearing should be held in the district judge’s private rooms. If creditors have objected they, or their representative, may go to the hearing too. You should be given a chance to state your case, and if the problems are then resolved, the district judge will make the order.
Once the order is in place, you make your payments to the court and not to the creditors.
If your application is turned down
If your application is turned down you may have grounds for appealing or making a new application. Contact us for advice.
How long does an administration order last?
Unless the judge makes a composition order (see the later section What is a composition order?) or you stop making regular payments, an administration order will go on until all the debts are paid off in full. Your creditors may ask for your payments to be reviewed, or you can apply to change the terms of the order if your circumstances change. Details of your administration order will be recorded on credit reference files for a period of six years from the date of the administration order.
Problems with applying for an administration order
If you have to go to a hearing, it may be useful to contact a local advice agency such as a money advice centre or Citizens advice, all of whom may have experience of your local county court’s policy. Here are some problems that you might come across.
My debts are more than £5,000
Although administration orders are designed to deal with credit debts, the instructions for completing your application say to list all your debts. This can cause problems, because if you have mortgage arrears, or other priority debts, this can sometimes mean that the total of your debt looks as though it is over £5,000.
You should state on the form that you are trying to come to separate arrangements with your priority creditors. If there is a hearing, take copies of any letters from your creditors to prove this.
If you have to apply again, you should try putting a line after listing your priority debts, so that they are clearly separated, and not including them in the final total.
Most courts will expect all your debts to be listed including priority debts. The creditors can then object to being included and then to go to the hearing. If they do not object they will be treated in the same way as all the other creditors listed. They should not be able to take any other action against you.
Some of my debts are in joint names
- When you fill in the administration order application form, you should state if another person borrowed the money with you and put down their name and address.
- You should put down the total amount of debt, and count it in full when deciding if your debts are under £5,000. This is because when you borrow money with someone else, you are each liable for the whole amount, not just for half each. This is known as joint and several liability.
- This may cause problems if the other borrower is your partner, as the creditor will still be able to go to them for the money if you get an administration order. If the other person also has a county court or high Court judgment and debts of less than £5,000 they can apply for their own administration order. If not, they will need to make a separate arrangement with the creditor concerned.
- Even if all your debts are in joint names, you will still have to apply for an administration order for each person. The court does not usually accept joint applications.
- If you have a court judgment between you, but it is in joint names, you can use the same judgment to make separate administration order applications.
I haven’t got any available income
- Some courts may turn you down automatically if you are getting a benefit from the Department of Work and Pensions. They should not be doing this. Contact us for advice.
- Your applications may be refused if the information on the form makes it look like you haven’t got enough money to pay what you have offered.
- Take a copy of your budget to the hearing. If you have kept up with the payments on court judgments in the past you can tell the court this to show that you can afford the payments you have offered.
- Tell the district judge about any other circumstances you think she/he may not have taken into account.
- If you have been turned down without a hearing, or you have had a hearing but still don’t know why the district judge has refused to make an administration order, you may be able to get an explanation by writing to the court. Address your letter to the court manager.
What about council tax and community charge arrears?
Community charge (poll tax) is no longer in force so it is not an ongoing bill. Following a case called Preston BC v Riley  the court should allow you to include poll tax arrears in your administration order.
Council tax is an ongoing tax so you will have to include your usual payments in your essential expenditure on your budget.
Council tax arrears for previous years can be included on the administration order on the basis of the Preston BC v Riley  case in the same way as poll tax debts.
The current year’s council tax bill cannot normally be included unless you have fallen behind with payments and the council has told you that you have lost your right to pay by instalments, meaning the whole year’s bill is now due.
If your council tax is included in the administration order, any deductions from your benefit for payment of arrears should stop. Payments being taken from your wages for council tax arrears should also stop. Contact us for advice.
What about magistrates' court fines?
You should include any magistrates' court fines in your application for an administration order. It is common for the fine to be left out of your administration order by the district judge. It is important to keep paying the fine as normal to the magistrates' court until it is agreed that it can be included in your administration order. Otherwise the magistrates' court will take other action against you. Include the payments you are making to the magistrates' court in your ‘regular expenses’ on the administration order. See our Magistrates' court fines fact sheet for more information.
Social fund loans and benefit overpayments
If you are having a weekly deduction made from your benefit for a social fund loan or overpayment of benefit you may find the Department for Work and Pensions (DWP) will continue to make deductions and object to being included in your administration order. You should still include a social fund loan in your application but it is likely to be left out by the district judge.
Make sure you only include the benefit you are actually paid after deductions are taken under ‘income’ on the application.
What can I do if I cannot afford to pay?
- You can apply to change the amount you pay each month if you think the court has set your payments too high, or if you have a change of circumstances that means you have less money available.
- You can use an N244 form, which is a general county court application form. You can get one from your court office. You should not pay a fee for making this application.
- These costs are treated as already being covered by the ongoing deductions to cover fees already in your administration order. If you are told to pay a fee complain to the court manager or, contact us for advice.
- State you wish to apply for a variation of the payments you are making under your administration order and say why you are applying. You can attach a copy of your budget to show how you have worked out your offer.
- You will usually have a hearing with the district judge in their private rooms. The district judge can change the terms of the administration order or composition order.
What if I don't keep up with the payments?
The court can cancel or ‘revoke’ your administration order if you do not keep up with the payments. This is why it is very important to keep up with the payments or ask the court to reduce your payments if you can no longer afford them. If your administration order is revoked your creditors can pursue you again for each debt you owe in full, even if you had a composition order made.
What will happen when my administration order is paid off?
When you have paid the administration order off in full you can get a ‘certificate of satisfaction’ from the county court. You have to pay a fee of £15 for this.
Details of your administration order are kept on the Register of Judgments, Orders and Fines. This agency should mark your file to show the debts and the administration order are satisfied. If you have a composition order on your administration order then you can still get a certificate of satisfaction to show the administration order is paid but individual county court judgments and other debts showing up on your credit reference file will not be marked as satisfied as they have not been paid in full.
None of your creditors listed on the administration order can take further action against you if your administration order has finished, either because you paid it in full or paid the amount owed under the composition order.
What is a composition order?
If you are only paying a very small amount to your creditors there is a danger that your administration order could go on for years. A composition order is a way of trying to make sure that this does not happen. If the district judge makes a composition order, it means that you only have to pay part of your debts, usually an amount that you could manage to pay over a three-year period.
Asking for a composition order
Although the court should automatically consider whether it is appropriate to make a composition order in your case, you can use the anything else you would like the court to take into account box in PART C of the application form to say you would like a composition order. When applying for a composition order you need to work out how much you can afford to pay each month. This is then compared with how much you owe.
The result is that for every pound you owe, you will only pay a percentage of this off your debt. In the example shown below 11 pence is paid for every pound owed.
If you do not have a composition order made, you can apply for one separately even after your administration order is up and running. To apply for a composition order after the administration order has been made, use a form N244 which you get from your court. You should not have to pay a fee for this application.
The court can either agree your application or ask you to go to a hearing with a district judge in the County Court. Your application should not be rejected without a hearing. Contact us for advice.
How to work out a composition order
1 Work out how much you owe in total on your administration order. 2 Work out how much you can afford to pay each month using your budget. 3 Decide how long you can reasonably manage to pay, for example:- you might owe £3,000, which you pay at £10 per month and you decide to ask for a 3-year (36-month) pay back time. 4 Multiply the amount you can offer each month by the number of monthly instalments you will pay. 5 Work out 10% of the total you will repay which will be taken by the court as a handling fee. 6 Take away this amount from your total. 7 Multiply your new total figure by 100. 8 Divide the result by the amount of the debt. 9 This will be the final offer to pay to the extent of x pence in the £.
Stage 1 How much do you owe on your administration order? £3,000 Stage 2 How much can you afford to pay each month? £10 Stage 3 Pay over a reasonable length of time. 36 months Stage 4 Work out the amount you can afford to pay and multiply this by the repayment period. £10 x 36 months = £360 Stage 5 Work out the 10% handling fee, on the total amount you will pay back. 10% of £360 = £36 Stage 6 Take away the 10% handling fee for the court from Stage 4. £360 - £36 = £324 Stage 7 Multiply the total to pay in Stage 6 by 100. £324 x 100 = £32,400 Stage 8 Divide the result in Stage 7 by the total debt from Stage 8. £32,400 ÷ £3,000 = 10.8 pence in the pound Stage 9 Round up the result from Stage 8. 10.8 pence in the pound rounds up to 11 pence in the pound
In this example, you would offer to pay 'to the extent of 11p in the £'
If you want to check you have worked out the composition correctly, contact us for advice.