Opening the bank vault...

Taking a closer look at Third Party Debt Orders

In this article we provide an overview and a summary of the benefits of third Party Debt Orders, following an increase in our own success rates by utilising this little adopted method of enforcement of Judgment debt.

The latest Quarterly Court Statistics indicate that a Third Party Debt Order (TPDO) is one of the least used methods of enforcement of a Judgment debt. Indeed, there has been a general downward trend in this method of enforcement since 2008. However, we are in fact seeing an increase in our success rates by utilising this little adopted method of enforcement, which is leading to our clients getting their cash back in their own bank account, rather than sitting in the accounts of their debtors. We anticipate an increasing use of this method of enforcement, as the bankruptcy level increases in October.

What is a Third Party Debt Order?

A TPDO recovers funds by 'freezing and then seizing' money owed to your debtor by a third party (usually a Bank or Building Society), to contribute to or settle your Judgment debt. It is necessary to first know which third party may owe your debtor money and detail the source of this information, as the Court will not grant ‘speculative applications’.

Following an Application to Court for a TPDO, an Interim Third Party Debt Order will be issued and served upon the third party, listing a date for Hearing. Once served, the third party is required to disclose to you the sum(s) which it owes solely to the Judgment debtor (if any), within seven days. If the third party is a bank, they must not pay the Judgment debtor any sum exceeding the Judgment debt, unless a Hardship Order is made. If the third party fails to deal with the Interim and secure the sums owing to the debtor, it risks the Final Order being made in any event and being ordered to pay the required sum.

Where funds are available, and subject to the Final Order being granted at Hearing, the Third Party must pay the Judgment creditor the money it holds.

The key is to ensure that you obtain and keep up-to-date records of your customer’s bank account / building society details, which will be very important in making the Application. Alternatively, the information may be obtained under a separate Order to Obtain Information, followed by an immediate Application into Court following questioning.

This is a relatively inexpensive way of enforcing a Judgment debt which, in the right circumstances, can be a very effective means of getting your money back quickly. As a recent example, the DWF Recoveries team has been successful in securing approximately £65,000 held in a bank account by a Judgment debtor. Whilst a high value action, this enforcement method is equally viable for debts large or small, with other Orders granted for £8,000 and £3,000 over recent weeks.

Timing, however, can be critical.

What type of ‘debt’ can be attached?

  • Money held in a debtors bank account.
  • Rent due to a debtor.
  • Joint Judgment against a joint account (e.g. partnerships).
  • Debts of unascertained sums.
  • Executors and Personal Representatives.
  • Bills of exchange before maturity.
  • Funds derived under an international treaty.

What type of “Debt” cannot be attached?

  • Wages (see Attachment of Earnings Orders instead).
  • Debts due from the Crown.
  • Assigned debts.
  • Debts recoverable out of jurisdiction.
  • Debts owed from joint bank accounts where all parties are not Judgment debtors.

Whilst the TPDO can be a bit of a lottery given the issues with timing, e.g. when the Court will issue the Interim and what funds may be available on the date of service thereafter, there are huge advantages to the application if you have good intelligence about your debtors.

The key benefits of a TPDO

  • Costs effective process.
  • Money in the debtors account is frozen and seized to pay your judgment.
  • Freezing the account may be enough to get debtors to pay voluntarily from an alternative source to ensure their own trading activity isn’t affected and to get to you withdraw the Application (similar to insolvency).
  • Amounts are paid in cash (i.e. cleared funds).
  • Can be used alongside other enforcement methods (e.g. securing via Charging Order).
  • It is a quick and forceful method of ensuring payment.

Recent DWF case studies

In a recent case on behalf of a Trustee in Bankruptcy, we have been successful in obtaining a Third Party Debt Order against funds that the Bankrupt caused to be passed through several bank accounts and into that of one of their companies.

In another case on behalf of a Professional Services Sector Client, we have secured a sum in one of their debtor’s bank accounts whilst jointly securing the Judgment debt against property – this has restricted the ability of the debtor to both use their reserves for business purposes and dispose of any property, which may be an effective tool to adopt in the right circumstances.

A third case saw several Applications made against bank accounts known to be held by the Judgment debtor. Due to the obligation on the third party served with the Order to disclose all accounts for the debtor solely - including whether the account is in credit and the balance, alternative accounts coming to light which weren’t previously known to the Client.

If you have any questions about TPDOs or would like to know how the debt recovery team could help you, please contact one of our specialists below.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

David Scottow

Director - National Head of Recoveries

I am a Senior Director and National Head of Recoveries with almost 40 years’ experience in debt litigation, insolvency and credit management..


Jeffersen Gledhill

Legal Recoveries & Operations Manager

I am Legal Recoveries and Operations Manager, working on the recovery of volume and 'niche based' commercial and consumer debts.

James Perry

Director Technical - Co-Manager of the Recoveries Team

I am a Director Technical at DWF and Co-Manager of the Recoveries Team.