What is a third party debt order?

If you have a county court judgment (CCJ) and you don’t make the payments ordered by the court, your creditor can apply for a third party debt order. This tells someone who owes you money to pay it to the creditor instead.

Third party debt orders only apply in England and Wales but similar measures are available in Scotland and Northern Ireland.

A third party debt order is also sometimes called a ‘garnishee order’.

How do third party debt orders work?

Third party debt orders are typically used to make your bank or building society pay money in your current or savings account to your creditor.

They can also be used to take lump sums from redundancy payments or endowment policies, but this rarely happens.

Your creditor can only take enough money to clear your debt.

What debts can a third party debt order be used for?

Third party debt orders can be used for all types of debt, including:

overdrafts
credit cards
personal loans
hire purchase agreements

But they can only be used if you have a CCJ and haven’t made the payments ordered by the court. Third party debt orders aren’t used very often. Creditors tend to prefer enforcement agents (bailiffs), charging orders or attachment of earnings (taking the amount owed from your wages each time you’re paid).

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How does a creditor apply for a third party debt order?

Your creditor will apply to the court for the order. There’s a £110 fee that will be added to your debt as you’re responsible for paying it.

The court will then write to your bank or building society and tell them to freeze your account. There may be a charge of up to £55 from your bank or building society for this.

Seven days later, the court will send you an N349 interim third party debt order form telling you the money in your account has been frozen.

Your creditor and bank or building society will already have received this, so you can’t withdraw any money beforehand.

This is a temporary order that will remain in place until a hearing when a judge will decide what to do. No money will be taken at this point.

What happens when my account is frozen?

Only the money in your account at the time of the order will be frozen.

Anything paid in afterwards isn’t frozen and you can withdraw that money as normal.

If your CCJ debt and court costs are less than the money in your account, only the amount you owe will be frozen. You can withdraw anything extra.

What happens after the interim third party debt order?

The interim third party debt order will set out a time and date to attend your local county court hearing centre. You’ll get at least 28 days’ notice.

What happens at the hearing?

A judge will decide whether to make a final third party debt order. If they do, your bank or building society will pay the frozen money to your creditor.

You’ll get the chance to raise any objections to the order going ahead during the hearing.

Objections may include:

being unable to afford essential living costs
the order being applied to a joint account and the other party not being responsible for the debt

If you have a building society or credit union account, you could also argue if the debt was paid you’d be left with less than £1 – the minimum amount most want to keep your account open. This doesn’t apply to other accounts.