What is a Third Party Debt Order?
A Third Party Debt Order is a way of enforcing a County Court Judgment (CCJ) by obtaining payment from a third party that may be holding your money – such as your bank.
3rd Party Debt Orders were formerly known as Garnishee Orders.
Means to Pay – But Will Not
A third party debt order allows a creditor to get the money you owe directly from wherever it's being held for you, usually your bank.
A creditor may believe you can pay them – but are choosing not to. They may have reason to believe you are due to receive money don’t but think you’ll use it to pay towards their debt, when in fact you could and should.
In such circumstances, the creditor may seek to get a 3rd Party Debt Order which cuts you out of the loop allowing them to obtain payment from whoever is holding your money.
This is often used by creditors who know the debtor’s banking details, or they are aware of a large contract the debtor may have.
From the creditor’s point of view, a primary benefit of using a Third Party Debt Order is an element of surprise. You will not know about the application until after you are served with the Court Order. By which time, your bank account or funds held by a third party are already frozen.
A risk for the creditor is if your bank account is held jointly with another person who is uninvolved with the debt, the application is rejected. Even if the bank account is solely in your name, the order will be ineffective if the account is not in credit on the date you are served the order.
Interim 3rd party debt order
To get a third party debt order, the creditor needs first to get an interim 3rd party debt order.
This is a temporary order to stop payment to you of any money held. A hearing for the full order will follow within 28 days.
In the case of money held by your bank – the creditor does not need to know account details. They just need to know you have an account with a given bank/building society. If you’ve paid them from your bank by cheque, direct debit or standing order – they’ll know who you bank with.
To find yourself subject to a frozen bank account can cause lots of problems as any other direct debits and standing orders will fail.
Hardship payment order
If you can’t meet your daily living expenses due to frozen accounts, you can apply to the court for a hardship payment order. This tells the third party to release some of the frozen funds.