Administration Order
Introduction -an administration order was is broadly similar to an informal arrangement,. The main difference being that the court implements the administration of it rather than the Individual. The individual is expected to make repayments directly to the court. The court then redistributes this money to creditors on behalf of the individual, and will normally take a 10% 'administration fee' from the monies for doing this. If the past, an individual has been negotiating an informal agreement with creditors, but one or some of the creditors refused to accept the proposed informal agreement, an administration order provides a useful alternative. Whereas an Informal Agreement is a 'gentleman's agreement', an administration order is binding by the court, and so all creditors what must adhere to its terms (even if they disagree with them). The individual can apply themselves for the order although it is most advisable to seek professional help from organisations such as the The Citizens Advice Bureau (CAB), before entering into DIY legal processes.
Pros and Cons - For the individual, the main advantages of using this process are as follows:-
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It is binding on all creditors (even though some of them may disagree with it entirely)
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It avoids the formal Insolvency Process and stigma associated with going bankrupt
The main disadvantages are as follows:-
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The individual must have one existing county court judgment (CCJ), already entered against their name, before they are allowed to apply for an administration order and;
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Their total debts should not be more than £5000. This £5,000 includes any possible mortgage debt (which of course would normally be more than £5,000 for most homeowners these days). Most creditors and do not want to participate in the process, as it involves legal expenses in a court process.
The Application Process - Individuals can apply directly to the court using Form N92, ((Application for an Administration Order from the Court Service website), which can be downloaded from the Internet. Upon completion and return of of the application. The court will then notify all the relevant creditors, who have the option to appear at an informal hearing, in front of the a district judge, (normally in their chambers). The judge will decide a fixed monthly repayment amount and consider any assets or liabilities accordingly. At some point in the future, the judge may decide to discharge the individual from the debts, (if it is viewed that they have acted honourably and in accordance with the terms of the administration order). Conversely, if the individual has failed to meet the terms, then it may be cancelled, leaving the creditors free to renew any claims against the individual.