How to Apply for a Third Party Debt Order

If your debtor is owed money by someone else, you can apply to the court to have that money ‘frozen’ so that it is not spent by the debtor. If the court grants you a third party debt order, the money will be paid to you. The most common type of third party debt order is against a bank or building society. It is important to note that in these circumstances you cannot obtain a third party debt order against available credit in someone’s overdraft. The account must be in credit. Your debtor may also be owed money by a supplier, customer or private individual, for example, each of which could also be the subject of a third party debt order.

You can only successfully obtain a third party debt order if the debt is owed solely to the judgment debtor (or all judgment debtors, if for example the judgment debtors are married.) This means that if you are owed money by one person, you would not be able to extract funds from a joint account that they shared with another person.

The Procedure

You can apply for a third party debt order after obtaining judgment, as long as your debtor did not pay by the time the debt was due (30 days after judgment), or has defaulted on agreed payments by installment. Timing is very important though. As the application is made ‘without notice’, this means that the judgment debtor will have no idea that you are intending to ask the court to freeze the money. For example, if your debtor gets paid on 30th of each month, there is no point in applying for a third party debt order and serving it on the 29th because there will be no money in the account. If your debtor is a landlord, it is possible to get a third party debt order against their tenant’s rent.

When the Interim Order Takes Effect

Perhaps the most important element of the third party debt order procedure is that the order only takes effect when it is served on the third party, rather than at the point at which the court makes the order. To apply for a third party debt order, you will need to complete form N349. You can download it from the HMCS website. You will need to verify that the information you provide is true. This is extremely important: if you do not tell the truth you may be held liable for contempt of court.

Service of the Interim Order

Once you serve the court with the third party debt order, it will be treated as urgent business and should be dealt with on the same day. Then you will need to arrange for the order to be served on the third party, either yourself or by using a process server. Once the third party has been served with the order, they cannot then pay the money to the debtor. If the third party owes them more than the amount of your debt, the third party can only pay the debtor money that is in excess of the amount of the order – so your debt cannot be touched.

Service on the Debtor

The court does not serve the debtor with the interim third party debt order until seven days after it makes the order. This is to give the third party the time to freeze the money. There will then be a hearing at court. The judge will then decide whether the money should be paid to you. It is important, as the creditor, to attend this hearing otherwise your application may be dismissed.

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