Following on from the previous blog in WHN’s debt recovery series, regarding options for pursuing outstanding funds through the courts, Amy Richardson now shares her top tips on enforcing court judgments.
A judgment from the court may be needed in cases where customers have either accepted liability for debt owed or where the defendant has failed to respond to a claim within the specified period. This means that the defendant automatically loses the case and is liable to pay the funds owed.
When a judgment is obtained for the money owed to you, there are a number of ways in which this can be enforced as while having the judgment is a step in the right direction, this alone does not secure the funds.
What is a third party debt order?
A third party debt order (TPDO) stops the debtor from obtaining money from a specified source until the outstanding debt is paid. While the third party usually refers to the defendant’s bank or building society, in some cases the TPDO may relate to another source, for example if you know the debtor is about to be paid by a customer then you can apply for a TPDO against that customer.
It is important to know that the third party does not need to be connected to the court proceedings in any way and that the money held by the source is the sole property of the debtor. TPDOs cannot be made against joint bank accounts for example, unless the outstanding debt is owed by both parties.
How do I obtain a third party debt order?
To obtain a TPDO from the courts, you must obtain details of the debtor’s bank account, for example a copy of their cheque or BACS details, before making an application for a TPDO. The fee for making a TPDO application is currently £100.
As long as the court is satisfied that the order is appropriate, it will make an interim TPDO which will fix a hearing date – usually within 28 days – to consider whether or not to make the order final and to also discuss how much the third party must retain. The funds retained are usually the debt owed plus fixed costs.
Once the TPDO has been served upon both the third party and the defendant, the third party will state whether they don’t owe any money or whether they owe less than the specified amount. If the third party is a bank or building society, the rules are more complex and the bank must carry out a search to identify all of the accounts held by the defendant before they are frozen to stop the withdrawal of money.
The third party should then wait until the outcome of the hearing, where a final order will be made, to make payment to you and discharge the debt to the defendant.
Costs accrued will be retained out of the money received by the third party in priority to the judgment debt, but if the final order made is for a smaller amount than the sum claimed, the costs of making the application will be paid first while the judgment debt will remain outstanding.
It is important to recognise that there is always a risk that the application is dismissed, for example if there isn’t enough money in the account, in which case other enforcement methods should be explored.
For more information on recovering outstanding debt by using a third party debt order please call Amy Richardson on 0161 761 8061 or email email@example.com