What is the Purpose of an Administration Order?

Administration orders are just one of the many methods one can choose to pay off debt.

Many people are confused as to how they can go about applying for an administration order. In fact, some don’t even know it’s an option to pay off their debt. Before applying for an administration order, it is advised that an individual must first consult with a debt counselor, to ensure that it is the right method for them.

If you’re choosing to apply for an administration order at a court, you should have at least one court judgment against you. Most people also apply for an administration order, to prevent creditors they owe money to, from proceeding with taking further action against them.

Once applied, a judge must decide whether to grant you the administration order, which all depends on your situation. You may also be asked to attend a court hearing.

If the order does get approved, your debts will all be dealt with together, as one, which will require you to make monthly payments to court, for the entire amount you owe to your creditors.

The purpose of an administration order

The purpose of an administration order is thus to help you pay off your debt, without having to deal with your creditors. It is just another alternative to safely and legally repay your debts.

Each payment you make to the court will be deducted from the initial amount you owe, and the money will be distributed amongst the creditors you owe money to. During this time, your creditors are not allowed to communicate with you, without the court’s permission.

Who qualifies for an administration order?

Anybody who has two or more debts owe less than R50, 000, have a debt that is in a court judgment against them and can afford to make regular payments to the court, will qualify for an administration order.

If you can’t repay the full amount you owe, within a certain period, the court will grant you a composition order, which will allow you to pay what you owe, while the rest of your debt gets written off. A composition order thus only occurs when you’re unable to make payments fast enough to repay the total amount you owe, within the given period.

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