Q: I’m experiencing financial difficulties. As a sole trader can I go into administration?
Nov 04 2008
Answered by: Clive Lewis Ask a question
An administration order is a court order that allows you to make a monthly payment into the court, who will then share out the money among your creditors pro rata i.e. according to each creditors share of your total debt.
There are advantages of an administration order:
• It is binding on all creditors even if they disagree
• Inexpensive
• Just one payment to the court a month
• Avoids formal insolvency procedures
• You avoid the stigma of bankruptcy
The disadvantages are:
• Your total debts cannot be more than £5,000 and
• You must have a county court judgement entered against you before you apply
There are other alternatives. To find out more I suggest either get a publication such as a book by Cavendish Publishing in the Pocket Lawyer Series called Personal Insolvency. It’s written in fairly straightforward language and has a section on the terms involved.
Another useful port of call is The Insolvency Service.
I would also contact a Licensed Insolvency Practitioner (IP). They will be in the local telephone book. It is worth understanding as much as you can of the various options and procedures and the above publication and website will help with that. However, I would suggest you take advice early. A preliminary conversation with an IP would probably be free or low cost. Alternatively there are organisations offering advice such as the Citizens Advice; or National Debtline.
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