This procedure is designed to assist insolvent individuals with few, if any, assets but who have an income from which small levels of debt can be repaid over a period of time. It is a useful procedure but only appropriate in smaller cases. It is cheaper than bankruptcy and does not have the disabilities for the debtor which are attached to him presenting his own bankruptcy petition. County Court administration orders relating to individuals are made under the County Courts Act 1984 (CCA84) sections 112-117 and the procedures are governed by the Civil Procedure Rules 1998 (CPR98) Schedule 2 CCR Order 39.
Note: [CCA84 s112-117, CPR98 sch2 CCR Order 39]
57.62 How a debtor may apply for an order
If a debtor is unable to pay the amount of a judgment which has been made against him immediately ,and he alleges that his total indebtedness does not exceed the county court limit (currently £5,000) inclusive of the debt for which the judgment was obtained, he may request the court to make an administration order.
The procedures may be initiated by the debtor who files a request for an order in the county court for the district in which he resides or carries on business. Alternatively, where a debtor furnishes to the court a list of creditors and particulars of his means, either in his oral examination or by some other means, the court may proceed as if the debtor had filed a request for an administration order. The debtor is required to verify the statements he makes on oath.
Notes: [CCA84 s112][Form N92][CPR98 Sch2 CCR Order 39 rule 2] [CPR98 Sch2 CCR Order 39 rule 3]
57.63 Which debts are included
At present administration orders work by aggregating debts which must not exceed £5,000. However, the CCA84 section 112 does not define or clarify the nature of a debt for the purposes of an administration order. Consequently, there is little consistency about the types of debts included in, or excluded from, administration orders particularly where they relate to mortgages, other secured debts, consumer credit debts, maintenance payments and community charges (Re Preston Borough Council v Riley and another "The Times" 19 April 1995 Court of Appeal). There are also diverging views regarding the inclusion of arrears either that the entire sum is the debt or that only the arrears should be included.
57.64 Rights of creditors
Before an administration order may made, the court must notify each of the creditors on the list provided by the debtor and any creditor, whether or not he is on the debtor's list, has a right to prove his debt and to object to any debt included in the list. The court may appoint a day on which the application for the administration order is to be heard and give not less than 14 days notice to the debtor and the creditors mentioned in the list to attend and present their views. In general, it is undesirable for administration actions to take place without the participation of all the interested parties.
A creditor on the list may object to any other debt on the list or to the manner in which payments are to be made but must give not less than 7 days notice of his objection, stating the grounds, to the court, the debtor and to the creditor to whose debt he objects. If a creditor does not give such notice, he will require the leave of the court prior to making his objection at a later time.
After an administration order is made, a creditor who did not receive notice under rule 5 and who wishes to object to a debt scheduled to the order or to the manner in which payment is to be made by instalments, should give notice to the court of his objection and its grounds. The court will then consider the objection and may allow it, dismiss it or adjourn it for hearing.
If a person becomes a creditor after the date of the order, he may apply to be scheduled as a creditor but will only rank for a dividend after the "original" creditors have been paid. There is no provision in an administration order for preferential creditors.
Notes: [CCA84 s112(3)][CPR98 Sch2 CCR Order 39rule 5(2)(b)], [CCA84 s113] [CPR98 Sch2 CCR Order 39rule 6] [CPR98 Sch2 CCR Order 39 rule 10] [CPR98 Sch2 CCR Order 39 rule 11, CCA84 s113(d)]
57.65 Contents of order
An administration order may provide for the payment of debts by instalments to the court either in full or to such extent as appears practicable to the court in view of the circumstances of the case and subject to any conditions the court may think just relating to the debtor's future earnings or income. The court may make an attachment of earnings order to secure the payments required by the administration order. The court may exercise this power at any time whilst an administration order is in force, if it appears to the court that the debtor has failed to make a payment (see the Attachment of Earnings Act 1971 section 5).
57.66 Effect of order
Whilst an administration order is in force, a creditor whose name is included in the schedule to the order cannot, without leave of the court, present a bankruptcy petition, unless his name was notified by the debtor to the court as a creditor, his debt exceeds £1,500 and notice of the administration order was received within 28 days preceding the date of the presentation of the bankruptcy petition. Any county court proceedings in respect of a scheduled debt which are pending shall be stayed on receipt of notice of the administration order. Costs incurred by a creditor in respect of those proceedings may, on application, be added to the debt.
However, there is no requirement that a county court shall stay pending bankruptcy proceedings.
Notes: [CCA84 s112(4), CPR98 Sch2 CCR Order 39 rule 12][CCA84 s114(3)]
57.67 Right to distrain
A landlord or other person to whom rent is due may at any time either before or after the date of the administration order distrain upon the debtor's goods for the rent due to him. However, where the distress for rent is levied after the date of the order, this possibility is only available for the rent which accrued in the six months prior to the date of the order. Where an order is made and until it is revoked a creditor will not obtain leave under the CCA84 section 114 to issue execution, since the object of the order is to secure equal division of the debtor's property amongst all his creditors and giving such leave would in effect amount to setting aside the order (Re Frank  1 Q.B.9). However, if it appears to the district judge of the appropriate court that the debtor's property (excluding property of a certain nature) exceeds the specified minimum (at present £50), the judge is required to issue execution on the debtor's goods at the request of any creditor.
Notes: [CCA84 s116][CCA84 s115]
57.68 Notice of the order
When an administration order has been made notice of the order is required to be sent to:
A copy of the order is required to be sent to the following persons:
Notes: [CCA84 s113] [CPR98 Sch2 CCR Order 39 rule 9]
57.69 Conduct and review of the order
The conduct of the order is effected by the chief clerk of the court or other proper officer. He is required to take all proper steps to enforce the order, including the receipt and distribution of monies, and to bring to the court's attention any matters that would make it desirable to review the order. Where it appears that the debtor is failing to make payments in accordance with the order, the proper officer shall (either of his own action or on the application of a creditor whose debt is scheduled to the administration order) send a notice to the debtor :
If the debtor does not comply with paragraph (b) within the stated time, the proper officer shall revoke the administration order. The proper officer shall refer a notice given to a debtor as referred to above to the district judge who may, without requiring the attendance of the parties, either revoke the administration order or vary it or suspend the operation of the administration order for such time and on such terms as he thinks fit. On a review, the court may suspend the order if it is satisfied that the debtor is unable to pay an instalment due under it , or the court may vary it if there has been a material change in circumstances. The court may revoke the order if it is satisfied that the debtor has failed to comply with any conditions specified by the court or may make an attachment of earnings order. The debtor may also apply to the court for a review, e.g. if he is unable to maintain the scheduled payments.
Notes: [CPR98 Sch2 CCR Order 39rule 13][CPR98 Sch2 CCR Order 39rule 13A][CPR98 Sch2 CCR Order 39rule 14]
57.70EA Failure to make a payment (July 2007)
Where a person fails to make a payment in accordance with his/her obligations under an administration order the court may, if it thinks fit, revoke the administration order and make an order directing that the following restrictions shall apply for a maximum period of one year. The restrictions are that;
If the debtor fails to comply with these requirements he/she is guilty of an offence and liable to imprisonment or a fine, or both. On the revocation of an administration order, any attachment of earnings order made to secure the payments will be discharged.
Notes: [s429(2) [CDDA86 s12] [s429(3)(a)] [s429(3)(b)] [s429(5),s430,Schedule 10][Insolvency Proceedings (Monetary Limits) (Amendment) Order 2004 (SI 2004/547) s418]
The money paid into court under an administration order is required to be used first to satisfy the costs of the administration (which may not exceed 10 pence in the pound on the total amount of the debts) and then in accordance with the order in satisfaction of the debts. The officer who has conduct of the administration order shall from time to time declare dividends and distribute them amongst the creditors.
Notes: of money paid[CCA84 s117][CPR98 Sch2 CCR Order 39rule 17]
57.72 Discharge of order
The court decides how much the debtor can pay and over what period of time. Once these sums are paid, even if the amount is less than the sum owed, the debtor is discharged from his debts to the scheduled creditors. However, this does not release the debtor from his obligations to creditors who were not scheduled to the order.
Notes: [CCA 84 s117]
57.73 Effect of subsequent bankruptcy
An administration order is not automatically revoked by a bankruptcy order. The official receiver should notify the court of the making of the bankruptcy order and request a copy of the application made by the debtor, the schedule of creditors and details of payments made by the debtor together with any distributions made by the court. It is likely that, on becoming aware of the making of the bankruptcy order, the court will review the administration order. If it does not, and the official receiver considers that it is desirable that the administration order should be reviewed, he may make an application for review on the bankrupt’s behalf. If the court reviews the administration order and is satisfied that the debtor is unable to pay any instalment due under the order by reason of the bankruptcy order then it may suspend the operation of the administration order for such time and on such terms as it thinks fit. Alternatively, the court may, if it considers it just and expedient to do so, revoke the administration order. Any monies paid into court whilst the administration order is in force are to be appropriated and distributed in accordance with paragraph 57.65. Such monies do not form part of the bankrupt’s estate and are not recoverable by the official receiver or trustee.
Notes: [CPR98 Sch2 CCR Order 39rule 13(1)][CPR98 Sch2 CCR Order 39rule 13(3)][CPR98 Sch2 CCR Order 39rule 14(1)(a)][CPR98 Sch2 CCR Order 39rule 14(1)(c)]
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