What is an Administration Order?
An Administration Order is a legally binding administrative arrangement, issued by a County Court, that enables you to pay only what you can afford each month (after your essential expenditure such as priority debts and general living costs have been accounted for) towards your credit debts.
As long as you maintain the payments that the court has deemed affordable to you, all interest is frozen and you will be legally protected from your creditors taking any further enforcement action for the duration of the Administration Order.
In practice, the agreed monthly payment is distributed to your creditors by the court, which takes a 10% administration fee (e.g. for every £10 the court decides you can afford to repay, £9 goes to your creditors and £1 goes to the court).
Your creditors will receive a pro-rata payment based on the amount that you owe them. For example, if you owed Company A £2,000, Company B £1,000, Company C £1,000 and the court decided that you could afford to repay £100 each month (after court costs), then company A would get £50 per month (half of the £100) because they own half of the total debt (£2,000 out of a total debt of £4,000).
See also:
- Who qualifies for an Administration Order?
- How long does an Administration Order last?
- What debts are included in an Administration Order?
Debt Advice Foundation is a registered UK charity offering free, confidential support and advice on any aspect of debt, including Administration Orders. If you need to talk to someone about Administration Orders or would like general debt advice, please call 0800 043 40 50 to speak to an adviser.
