Creditor objects to an administration order

To get an administration order, you must fill in an application form and sign it in front of a court officer at your local county court. Once the court have looked through your application they will decide how much you will repay each month and for how long. They will then tell your creditors who can object.

This pages tells you why your creditors may object and what will happen if they do.

After hearing from the court, your creditors have 16 days to object to the administration order.

Creditors may object to:

• their inclusion in the administration order

• the amount they are owed

• the repayment offer

• the use of a composition order.

If any of the creditors object, a hearing will be organised to take place at the court in front of the district judge. The court must tell you about the hearing 14 days in advance.

Which creditors might object?

All creditors are allowed to object but creditors owed the following debts are more likely to.

Council tax

Some local authorities have argued that council tax arrears can't be included in an administration order. In a court case, Preston BC v Riley, the judge rules that council tax arrears can be added to an administration order.

Magistrates court fines

In the past magistrates courts have said that a fine is not a debt, but in a court case Re Pascoe the judge ruled that a fine was a debt, "if the word 'debt' is to bear its ordinary meaning". It is now widely accepted that fines can be included in an AO, but some judges still use their discretion to exclude them or will not allow a composition order where there is a fine scheduled to the order.

Benefit overpayments which are being deducted from benefit

The Department for Work and Pensions (DWP) have traditionally objected on the grounds that they can continue to take deductions after bankruptcy. However, the Supreme court decided in the case of Secretary of State for Social Security v Cooper and Payne that the DWP must not continue to take deductions from a person’s benefit after a bankruptcy order or a debt relief order has been made. It can be argued that an administration order should have the same effect.

Social fund loans

The DWP might object on the grounds that a law was passed in 2012 to specifically exclude social fund loans from both bankruptcy and debt relief orders. It can be argued that when the law was changed there was no change to the law relating to administration orders and therefore social fund loans can be included. It is up to the district judge to decide if this is reasonable.

Rent arrears

An administration order will not protect you against possession action by your landlord and so unless your landlord agrees in advance that they will be happy for you to add them to an administration order it would be best to make a separate arrangement to pay these and ask the court to exclude the rent arrears from the order.

More about rent arrears and administration orders

What to do if a creditor objects

If one of your creditors is arguing that they should not be included in the order you will need to attend the hearing. You can argue that the objection should not be allowed for the above reasons and also that:

• one of the main principles of the administration order regime is that all of your debts should be dealt with together

• if this creditor is left out of the order you will need to make separate arrangements to pay them and this will affect the amount available for all creditors under the administration order and would cause you additional hardship.

At the hearing, the judge will decide what is reasonable and may not accept the creditor's objections.

If the creditor objection is successful you will need to make arrangements to pay them outside of the administration order.

Creditors are still contacting you

If a creditor objects to the administration order and a hearing is arranged, it can take three to six months for the administration order to be set up. During this time, your creditors can still try and chase you for the debt you owe them. They may send you letters and call you about your debts. In the worse case scenario, they can still send the bailiffs round. If bailiffs do come to your home, don't open the door to them.

If you are still being chased by your creditors, speak to them on the phone or write to them. Tell them you want to repay the debt, have applied for an administration order and are waiting for the court hearing. Ask them to stop contacting you until the court hearing is over.

Next steps

• What happens if a court hearing is called?

• More about composition orders

• Is an administration order right for you?

• Bailiffs