Creditor objects to an administration order

Summary

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

Key information

• 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.
• What happens if a court hearing is called?
• More about composition orders
• Is an administration order right for you?
• All creditors are allowed to object but creditors owed the following debts are more likely to.
• 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.
• 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.
• 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.
• 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.
• 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.
• 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:

Practical guidance

• Source: Creditor objects to an administration order

Related topics

More in this area

• Check if a financial service has followed the rules
• Check if you have to pay a debt
• Check the rules after you go bankrupt
• Check what an IVA is
• Cold called by a debt management plan provider