What is a Garnishee Order and how does it work?

What options do you have if you are owed a significant sum by a customer who seems to be unwilling – or claims to be unable – to pay? There are a number of enforcement routes which can help you to recover a debt, although it has to be said that debtors are increasingly alert to the ways of avoiding enforcement and repayment.

However, one option which can take debtors by surprise is a Garnishee Order, also known as a Third Party Debt Order – largely because by the time a debtor is aware that an order has been made, their funds have already been frozen!

A Third Party Debt Order is a way of enforcing a County Court Judgment (CCJ) against an individual or a company, and is normally made to stop a debtor from removing funds. It is usually made against a bank (although can be another institution, an employer or an individual) and the person or organisation that is holding the money is referred to as the ‘third party’. The person or company which who owes you the money is known as the ‘judgment debtor’, while you are referred to as the ‘judgment creditor’.

You can make an application for an order at any time after you have obtained a CCJ, although the judge who considers your application will only make an order if the judgment debtor has failed to pay the CCJ when it was due, or has failed to pay one or more instalments due under a CCJ.

The order will be sent to both you and the third party via first class post. The debtor will not receive a copy until seven days after it has been sent to the third party. This delay ensures that the funds are frozen by the third party before the debtor is informed of the order.

If you need the Third Party Debt Order to reach the debtor on a specific date, you have the option to serve it yourself. To do this, you must request permission in the cover letter when submitting your application to the court. You will also need to complete form N215 at least two days before the hearing or present a completed N215 form at the hearing itself.

The order will include a hearing date, where the judge will determine whether the frozen funds should be paid to you. It is important to attend the hearing, as failure to do so may result in your application being dismissed.

Another issue to consider when applying for a Third Party Debt Order is ownership of the account you are asking to be frozen. If the account is held in joint names, and the other account holder does not owe you money, the application will inevitably be rejected. The debtor and third party also have the right to object to your application by filing written evidence of their objections. If they have filed objections, the judge will expect them to attend the hearing.

Despite these risks, as long as you know the account details of the debtor, a Third Party Debt Order can be an effective measure to enforce a CCJ. The debtor will not be alerted when the application is made, and they will not be notified until after you have served the third party with the order – by which time their bank account or funds will have already been frozen.

As always, it’s important to seek expert advice before beginning the legal process to recover debt.

The procedure for using the Third Party Debt Order process is as follows:

• Obtain a County Court Judgment (CCJ).
• Complete court form N349, and send the application to the court with the necessary fee.
• The court will issue an Interim Order with a hearing date.
• Serve the Order on the third party, and then file a certificate of service with the court.
• The third party will disclose the amount frozen (if the third party is a bank, they will also disclose any other bank accounts the debtor may have); you will then need to send this correspondence to the court.
• Attend the hearing listed at court.
• Obtain the Final Order, and either you or the court serve the Final Order on the third party, then wait to receive the funds.