A third party debt order is an order of the Court that freezes money held by a person, organisation or institution, such as a bank or building society, which might otherwise be paid to the debtor against whom we have a judgment against. The organisation or person that is holding the money is referred to as the ‘third party’. A third party debt order will prevent the debtor having access to the money until the Court makes a decision about whether or not the money should be paid to you.
The money held by the third party must be held solely for the debtor. You cannot, for example, apply for a third party debt order against a joint bank account unless the judgment debt is owed by all the account holders.
When can we apply for a third party debt order?
We can make an application for an order at any time after you have obtained judgment. However, the judge who considers the application will not make an order unless the judgment debtor:
- has failed to pay the amount of the judgment when it was due or
- has failed to pay one or more of the instalments due under the terms of the judgment.
Timing is vital
We will carefully consider the debtor’s circumstances when making an application. The Court order which is initially sent to the third party will only ‘freeze’ money held in an account on the day it is received by (served on) the third party.
So if, for example, the order is received a couple of days before the debtor’s salary is paid into the account, we are likely to receive little or nothing on our client’s behalf. This is because the ‘freeze’ will not be applied to any money paid into the account after the Court’s order was received.
What do third parties do when they receive the order?
If the third party is not a bank or a building society, within seven days of being served with the order, the third party must let us and the Court know if:
- the third party claims not to owe the judgment debtor any money or
- the third party claims to owe the judgment debtor less than the amount being claimed in the order.
If the third party claims not to owe money to the judgment debtor we can dispute this. We would file written evidence with the Court not less than three days before the hearing. At the same time we would send a copy to the third party and to the judgment debtor. The evidence would be in the form of a witness statement.
If the third party is a bank or building society, within seven days of being served with the order, the bank or building society must carry out a search to identify all accounts held in the sole name of the judgment debtor.
For each account identified they must tell us and the Court:
- the account number
- if the account is in credit and, if it is
- whether the balance of the account is sufficient to cover the amount being claimed in the order
- if it is not sufficient the balance in the account at the time it was served with the order
- whether the bank or building society is entitled to retain some of the credit balance to offset debit balances or other amounts.
The bank or building society may charge for carrying out the search. This charge will be deducted from any money standing to the credit of the judgment debtor.
If you have any questions or require any further information, please do not hesitate to call us directly on 01228 713070.
Posted: August 13th, 2014