A creditor can only apply for a Third Party Debt Order against you if they have first been granted a County Court Judgement (CCJ) which you have not paid.
It would be unusual for a commercial creditor such as a bank or credit card company to use this type of debt enforcement method. They are more often used by creditors who know you personally are therefore more likely to be aware that you have funds which you are holding back.
The creditor does not have to provide specific details about the funds they believe you have in your account but they must have a good reason for thinking the you have an account with funds in it for example you have already made payments to them in the past from the account.
The process they need to go through to get the Order against you is as follows:
1. Court issues an Interim Third Party Debt Order
Having received an application for a Third Party Debt Order the Court will consider the application and make a decision or not as to whether the creditor’s claim seems valid. If so they will issue a temporary order called an Interim Third Party Debt Order.
If the Court decides to grant the Interim Order they will send a copy to your creditor and your bank or building society and tell them to freeze funds in your account up to the amount you owe to the creditor. The funds will be frozen immediately on the date that your bank receives the interim order.
This could cause you considerable problems as you will not be able to access the money in your account unless the funds are greater than the total debt you owe. This may mean you cannot pay essential bills, other debts, or even manage day to day living expenses.
BMD Tip: Your bank will receive a copy of the Interim Order seven days before it is sent to you so you do not attempt to withdraw money from the account.
Are you at risk of getting a Third Party Debt Order? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts
2. Court Hearing to make final decision
If an Interim Third Party Debt Order is issued no money can be paid from your bank to your creditor immediately. There first needs to be a Court hearing where you will be able to argue your case. After hearing both sides of the argument the Court will decide whether the Final Order should be issued. If it is then the money will be taken from your account and paid to the creditor.
You will be told when the hearing is. It should take place within 28 days after the interim order is made. You should attend the hearing in person as this is your opportunity to put across your case against the Order being issued.
How to stop a Third Party Debt Order being issued
There are a number of arguments you can use to defend against the Order being made and the funds actually being taken from your account.
1. Your money is in a joint account
You can argue that the other account holder does not owe the debt. Forcibly taking money from a joint account could be an illegal act especially if it was paid into the account by the other joint account holder or on behalf of the other account holder.
2. The debt is for a small amount.
You can argue that a third party order is too serious a step and the debt could be paid off quickly by instalments. A judge can refuse to make a third party debt order final if they consider that the sum owed is too small to justify it
3. Making the order will cause a lot of hardship to you or your family.
Where this is the case the judge may refuse to make the order final and instead suggest that the creditor uses other means to recover their debt.
4. The money in your account belongs to someone else.
If you can successfully prove that you are simply holding the money in your account on behalf of someone else the judge may then not make the third party debt order final.
5. Your money is in a building society or credit union
If this is the case and as a result of the Order being issued you would be left with less than £1 if the debt were paid. (This doesn’t apply to other bank accounts).
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