What is a Third Party Debt Order? (Formerly a Garnishee Order)

A Third Party Debt Order (TPDO) Court Form N349, once known as a Garnishee Order, is a court directive allowing a creditor to retrieve money directly from a third party, often a bank or building society where the debtor holds funds.

How does a Third Party Debt Order (TPDO) work?

To obtain a TPDO, a creditor needs a County Court Judgment (CCJ) against the debtor, who has not settled the debt. The creditor completes an application form, submits it to the court, and a hearing date is set. The debtor and the third party are notified.

During the hearing, the judge decides whether to grant the TPDO. If approved, the third party must pay the creditor the debt amount, deducting it from the debtor’s account and forwarding it to the creditor.

What are the consequences?

A TPDO can significantly impact the debtor’s finances. Accessing their money becomes challenging, affecting bill and rent payments, and may harm their credit rating.

How to avoid a TPDO

Debtors can take steps to prevent a TPDO:

1. Communicate with creditors: Reach out early if struggling to pay debts. Creditors may agree to a payment plan.
2. Seek debt advice: Consult organizations like Citizens Advice, StepChange, or National Debtline for free and confidential advice on debt management.
3. Consider debt relief: If repayment is impossible, explore options like a Debt Relief Order (DRO) or bankruptcy.

Court Form N245 Application to Set Aside Third Party Debt Order

You can use Court Form N245

Grounds for challenging a TPDO:

1. Order obtained through fraud or misrepresentation
2. Invalid due to an invalid County Court Judgment (CCJ)
3. Creditor non-compliance with TPDO rules
4. Excessive debt amount sought by the creditor
5. Debtor couldn’t afford to pay when the order was made
6. Changed circumstances, now unable to afford the debt
7. Debtor offered full or instalment payment
8. Creditor agreed to accept offered payment terms

TPDO and Full and Final Settlements

Johnny Debt would always recommend that if you have a sum of money set aside for full and final settlements, it is best that those funds are held with a third party or family friend! When negotiating full and final settlements, you will often be asked where the funds are held? Your response will be “with a third party or family friend”.

Additional points:

• TPDOs are valid for six months; after that, they expire if not enforced.
• Debtors can object to a TPDO with a valid reason.
• Debtors can request the court to modify TPDO terms, like reducing monthly deductions.

In summary, a Third Party Debt Order is a potent tool for creditors, but debtors can take proactive steps, such as seeking timely advice, to avoid its implications.