1. What is an administration order (AO)?

An administration order is made by the county court where, usually, at weekly or monthly intervals you would make payments to the court which would then distribute the payments among your creditors.

You may be eligible for an AO if:

1. You have at least one county court judgement against you.
2. You cannot afford to make the contractual repayments but you can make regular repayments.
3. Your debts don't exceed £5,000.
4. You have at least two creditors.

To apply for an administration order you can get the forms from your local county court. Your local Citizens Advice Bureau can advise you on the application process.

The court will assess your application and decide whether or not to make the order and how much the payments should be. The court takes a fee of ten percent of the payments you make for their administrative costs.

2. What are the possible benefits of an AO?

• Interest and other charges are frozen.
• Creditors in the AO cannot take legal action against you without the court's permission.
• Having the court deal with your creditors may be less hassle for you and can give you peace of mind because these creditors should stop chasing you for payment.
• If you cannot afford to pay the sum ordered you can apply to have the payments reduced.
• Some of your debts can be written off if the court agrees to make a composition order where you can make affordable payments over three years. This means that if you cannot afford to repay all of your debts, the composition order may be able to let you pay off just a fraction.

3. What are the possible disadvantages of an AO?

• Your creditors can object to the AO and to the composition order and can be excluded from the AO.
• If you don't make the agreed payments, the order can be revoked and creditors can take legal action against you to recover the full debt, even if a composition order had been made.
• If you don't make the agreed payments, the court can issue an attachment of earnings order where payments to the court are made direct from your wages.
• A record of your AO will be held by credit reference agencies for six years from the date of the order and this will affect your credit rating.

If you feel that an administration order may be a debt solution for you, your local branch of the Citizens Advice Bureau which you can find at www.citizensadvice.org.uk should be able to help and advise you.