There a number of advantages and disadvantages of consolidation. Their relevance will very much depend on your individual circumstances. We consider the advantages first.

Administration Order Advantages

1. Formal Legal Agreement
An administration order is a formal, legal debt solution which means it’s approved by the court and your creditors have to stick to it. They cannot continue to try and collect their debt from you once the Order is in place.

2. No upfront Fee
There’s no upfront fee when you apply for an Administration Order. The court keeps 10% of your monthly payment to cover their costs.

3. Single Monthly Payment
You make just one monthly affordable payment into court based on your disposable income. In this way you should always be able to make the payment without having to worry about where the money will come from.

4. Normally lasts for 3 years
Administration Orders are usually time limited and do not normally last more than three years. After this time any included debt which remains unpaid is written off.

5. Your home is not at risk
If you own a home you won’t be expected to sell it or remortgage it to pay into your administration order. It will be safe. However some courts will not grant an administration order to home owners or people with a mortgage – you will need to check the practice of your local court.

Administration Order Disadvantages

It is important to understand that as well as benefits an Administration Order can also have some disadvantages. Before making a decision to apply for this debt solution you need to understand these in the context of your circumstances.

1. Your total debt must be less than £5000
If your debt is more than £5000 you will not be eligible to apply for an Administration Order. In addition one of your debts must be subject to a County Court or High Court Judgment which you are unable to pay in full

2. You must make payments towards your debts
The court will review your income and living expenditure budget and ask for proof of the figures you provide (normally in the form of wage slips and bank statements). They will then ask you to pay all of your disposable income towards your debt each month for up to three years.

You must keep up your repayments or the court can take money from your wages (known as an ‘attachment of earnings order’) or cancel the arrangement.

3. Any valuable Possessions may have to be sold.
If you own a car or other large items, the court may expect you to sell them to pay off some of your debt. They may also expect you to use any savings you have to pay your creditors too.

Your state and personal pensions will not be affected by an administration order.

4. Your details are recorded on a Public Register
Your administration order is added to the Register of Judgments, Orders and Fines. It is usually removed 6 years after the date the order was made. Your entry is marked as ‘satisfied’ if you repay your debts in full.