Having issued proceedings, there is often a shortfall debt to consider once a vehicle has been recovered and sold.
Obtaining judgment does not ensure that payment will be made by the judgment debtor, as a court will not automatically enforce a judgment. The onus is on you to take enforcement steps.

There are, of course, various methods for enforcing a money judgment that you may routinely consider, including a charging order over a property, an attachment of earnings order, and/or insolvency proceedings.

In this piece we aim to give an overview of a lesser-used method, the third-party debt order, which can be highly effective should an appropriate situation present itself. We also offer our top tips to making a successful application at court.
So, what is the legal procedure for obtaining a third-party debt order?

Stage One – the interim order

An application is made in a prescribed form which includes details of the judgment debt and the identified third party.
The application should confirm that the identified third party is within England and Wales and owes money to, or holds money to the credit of, the judgment debtor. Documents supporting this assertion should be enclosed with the application. The application and requisite fee is sent to the court for consideration on paper.

If granted, the court will provide a hearing date where a judge will consider whether the interim order should be made final.
The interim order should be served first on the third party – to enable them to ‘freeze’ the monies – and then on the judgment debtor.

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The effect of service is that the third party cannot pay the debt out to the judgment debtor.

Stage Two – the final order

You, the judgment debtor and any person objecting to the interim order being made final may attend the hearing, and file and serve evidence ahead of it.

At the hearing the court will either make a final third-party debt order and direct payment to be made to you, or discharge the interim third-party debt order and dismiss the application.

If dismissed, the court may order you to pay the costs of the other parties. The strength of your application must therefore be thoroughly assessed at the outset.

By way of example: Our client obtained judgment against a judgment debtor for circa £28,000. We received information from a third party about an upcoming hearing. The suggestion was that the judgment debtor would receive monies on resolution of an impending trust claim. As it was a public hearing in open court, we attended the hearing on behalf of our client to gather information.

At the hearing, a firm of solicitors was ordered to receive and then pay across monies to the judgment debtor.

We immediately emailed the solicitors to request their consent to keep the monies on account, to avoid the need for an application. The required consent was not forthcoming.

On this basis, we applied for and obtained an interim third-party debt order to prevent the solicitor paying across the monies to the judgment debtor.

At the same time, we sent a statutory demand to the judgment debtor and exhibited a copy of the judgment. Our aim was to open lines of communication with him.

Following personal service of the statutory demand and interim third-party debt order, the judgment debtor made contact and we negotiated payment of the judgment debt by consent in advance of the return hearing.

If the interim order had been made final, the solicitors would have been obliged to make payment to our client and not the judgment debtor.

Tips for a successful application

Check that the judgment debt is due and enforceable. Before the application is made, the judgment debtor must have been given an opportunity to pay the judgment debt.

Allow time for payment to be made by consent. If an order for the payment of money does not specify a particular time for payment, the judgment debtor will usually have 14 days from the date of the order to make payment (CPR 40.11).

Check that the money held by the third party is held solely for the benefit of the judgment debtor. For example, you cannot apply for a third-party debt order against a joint bank account unless both account holders are judgment debtors.

While enforcement proceedings are not subject to a limitation period, clearly it is important to act quickly once you know that monies are available. There is no point in applying for a third-party debt order once the money has been paid out of the third party’s bank account.

Third-party debt orders can be used alongside other methods of enforcement to really intensify the pressure on the judgment debtor to make payment. However, where more than one method is used, you must make sure to update the court and your agents should any payment be made.

If you lack information about the judgment debtor’s assets, consider applying for an order to compel the judgment debtor to attend court for oral questioning.

This will involve questioning the judgment debtor about any assets they may have and their ability to repay the judgment debt.