Third party debt orders explained

Short answer

CPR 72.1 lets a judgment creditor obtain an order for payment of money that a third party within the jurisdiction owes to the judgment debtor. The third party is most often a bank or building society holding the debtor's account, and Part 72 applies to deposit-taking institutions in the United Kingdom. GOV.UK describes the effect in plain terms: the court freezes money in the debtor's bank, building society or business account and decides whether it can be used to pay the creditor. The order is made in two stages. An interim order, obtained without notice, directs the bank not to reduce the balance below the amount stated and fixes a hearing; at the hearing, not less than 28 days later, the court decides whether to make the final order. It is a one-shot method: it takes what is in the account when the interim order arrives, not future receipts.

The law

Scope and the order. CPR 72.1 sets the scope: money a third party within the jurisdiction owes to the judgment debtor. CPR 72.2 provides that the court may make a final third party debt order requiring the third party to pay the amount of any debt due or accruing due to the judgment debtor, or so much of it as is sufficient to satisfy the judgment and the costs, and that an interim order must come first. Conditions on deposit accounts about notice of withdrawal are disregarded.

Application and interim order. Under CPR 72.3 the application is made without notice, in the court that gave the judgment, by an application notice containing the information in Practice Direction 72 and verified by a statement of truth. Under CPR 72.4 a judge makes an interim order fixing a hearing to consider whether to make a final order and directing the third party not to make any payment that reduces the amount it owes the debtor below the amount specified in the order; the hearing is fixed not less than 28 days after the interim order is made.

Service. CPR 72.5 requires the interim order to be served on the third party not less than 21 days before the hearing, and on the judgment debtor not less than seven days after it was served on the third party and not less than seven days before the hearing. The order of service matters: the bank is told first, so that the freeze bites before the debtor knows.

The bank's duty. CPR 72.6 requires a bank or building society served with an interim order to carry out a search to identify all accounts held by the judgment debtor and, within seven days, to disclose to the court and the creditor the account details, the balance, whether the order has been complied with, and any set-off or other claim it makes to the money.

Hardship. CPR 72.7 lets the court, on an individual debtor's application, make a hardship payment order permitting a payment out of the frozen money where the debtor or the debtor's family is prevented from meeting ordinary living expenses.

The final order. At the hearing under CPR 72.8 the court may make the final order, dismiss the application, or decide any issue in dispute between the parties or between a party and the third party, and may direct a trial of any such issue.

The costs

An application for a third party debt order carries a court fee of £139. For comparison, an attachment of earnings order costs £139 and a charging order application £139. The costs of the application are usually added to the sum the final order directs the third party to pay, within the limits CPR 72.2 sets.

What happens next

1. Know the account. The application must identify the third party. Where the bank is unknown, an order to obtain information comes first; enforcement orders explained sets out that step.
2. Interim order. Apply without notice (CPR 72.3). The judge makes the interim order and fixes the hearing at least 28 days ahead (CPR 72.4).
3. Service. Serve the bank at least 21 days before the hearing, then the debtor at least seven days later and at least seven days before the hearing (CPR 72.5). The bank searches and discloses within seven days (CPR 72.6).
4. Hardship. An individual debtor who cannot meet living expenses may apply for a hardship payment order (CPR 72.7).
5. Hearing. The court makes the final order, dismisses the application or tries any dispute (CPR 72.8). The bank then pays over.
6. Choosing it. The order suits a debtor with money in an identified account on a known date, for instance after a salary or invoice is paid in. Where the debtor is employed but keeps little in the bank, an attachment of earnings may do better: attachment of earnings against third party debt order. Where the debtor owns property, a charging order secures the debt instead: charging order against third party debt order.

Where to get help

A debtor served with an interim third party debt order has days, not weeks, to apply for a hardship payment order and should take free, independent advice from National Debtline on 0808 808 4000 or Citizens Advice at once. A creditor unsure whether the debtor's account will hold enough on the day should take advice from a solicitor before paying the fee.