If you have a county or high court judgment debt, you may be considering an Administration Order, which allows you to repay over a period of time. For those struggling to pay over a reasonable time, you may be able to ask for a Composition Order. 

In this guide, we’ll explain what a Composition Order is, how it works within the context of an Administration Order, and whether it might be a suitable solution for your situation.

What is a Composition Order?

A Composition Order is a court-approved agreement that allows you to write off some of your debt included in the Administration Order while still making your monthly affordable payments. This type of debt solution is designed to provide relief when repaying the full debt amount would be unrealistic based on your financial circumstances. 

How Does a Composition Order Work?

As part of an Administration Order, the court looks at your financial situation and determines how much you can afford to pay off each month. However, if you can’t afford to repay all your debt over a reasonable time period (usually three years), you may be able to have a Composition Order. As long as you keep making your repayments, the remaining debt is written off once the set time period has ended.

There are a number of ways you may be granted a Composition Order for your debt: 

  • Your case may be considered automatically by the court after looking through your application form
  • You, the court or your creditors ask for a review of your Administration Order, usually if you’re struggling to make payments
  • You make a request in the comment section of Part C of your Administration Order application form. 

Eligibility for a Composition Order

To be eligible for a Composition Order, you must first qualify for an Administration Order. This means:

  • You have at least two debts
  • Your total debt doesn’t exceed £5,000
  • You have an unpaid High Court or County Court Judgment (CCJ) 
  • You have a regular income and can afford to make some payments towards your debt.

Once you meet these criteria, the court will consider whether a Composition Order is appropriate based on:

  • The size of your debt
  • Your income and essential living expenses
  • The timeframe over which you can realistically repay.

Benefits of a Composition Order

A Composition Order offers a number of potential benefits:

  • Debt reduction 

You only repay a portion of what you owe. The remaining debt included in the Administration Order is legally written off after the payment period ends.

  • Fixed repayment period

Payments are typically spread over a maximum of three years, providing a clear end point.

  • Court protection

Creditors included in the order cannot take further enforcement action, such as sending bailiffs or adding interest.

  • One affordable monthly payment

You make a single payment to the court, which distributes it to your creditors.

Drawbacks of a Composition Order

Despite its advantages, a Composition Order may not be suitable for everyone. You should also consider the disadvantages:

  • Court discretion

There’s no guarantee the court will grant a Composition Order, even if you request one.

  • Limited debt cap

Only debts under £5,000 qualify for an Administration Order, which can restrict eligibility.

  • Public record

Your order will remain on the Register of Judgments, Orders and Fines, which is accessible to the public, for six years.

  • Credit impact

Credit reference agencies are able to check the Register of Judgments, Orders and Fines so it may be difficult to get credit while you’re on it. 

How to Apply for a Composition Order

As mentioned above, if you’d like the court to consider a Composition Order for you, you can make a request in Part C of the Administration Order application form. Alternatively, if you already have an Administration Order, you can apply for it separately using form N244.

In addition to formally asking for a Composition Order, you should include a proposal with how much pence to the pound you intend to pay back. To work this out, follow the steps below: 

  1. Calculate how much you owe in total as part of your Administration Order.
  2. Work out how much you can afford to pay each month using our disposable income calculator.
  3. Multiply your monthly payment by the number of monthly payments you expect to make. Generally, a reasonable repayment period is three years, which is equal to 36 months. So, if your monthly payment is £30, the total you can pay is £1,080 (£30 x 36 months).
  4. Work out how much of this will go towards the court handling fee, which is 10% of the total you pay. For example, 10% of £1080 is £108. 
  5. Subtract this amount from your total to work out how much of your debt you can pay back, e.g. £1,080 – £108 = £972. 
  6. Convert this to ‘pence to the pound’ by multiplying by 100 then dividing the result by the amount of debt you have. For example, if your total debt is £3,000, £972 x 100 = 97,200 then 97,200 ÷ 3000 = 32.4p. 
  7. Round the amount up, e.g. 32.4 would round up to 33p. 
  8. Offer to pay ‘to the extent of your amount (e.g. 33p) in the pound’ in your proposal. 

Composition Order vs. Administration Order

Put simply, a Composition Order is an optional feature within an Administration Order. While an Administration Order requires you to repay your debts in full through affordable monthly payments, a Composition Order allows for part of that debt to be written off if full repayment isn’t possible within a reasonable time – usually three years.

Both provide court protection from creditor action and involve a single monthly payment managed by the court. The key difference is that a Composition Order reduces the total amount you need to repay, making it more suitable for those who can’t afford to pay back all their debt within the time period. 

For further information and advice about debt solutions available to you, don’t hesitate to contact our expert team here at MoneyPlus. Alternatively, you can get free debt advice from MoneyHelper.