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Obtaining a Third Party Debt Order over A Bank Account
T
he economy is in trouble, businesses rely on their customers paying their debts on time in order
to survive. So what can you do if your customers are refusing to pay you, how can you recover the monies owing to you? You could obtain a court
order to stop the defendant (your customer, the debtor) taking money out of his or her bank account! The money you are owed is then paid to you direct by your customer’s bank. The debtor is not permitted to take money out of that bank account until his bank settles the debt owing to you. Such an order is known
as a ‘third party debt order’. Such orders can also be sent to anybody who owes money to the defendant (ie, the debtors debtor!). Before any third party debt
order can be obtained, you must first have been through the necessary steps to obtain a County Court Order (CCJ). Under the procedure, a bank
or building society (where it is thought the debtor may have funds), will be served by fax immediately after the order is made. When a bank or building
society has been served with the interim Third Party Debt order they are required to locate all accounts held in the sole name of the debtor. The accounts will then potentially be frozen, preventing any funds from being withdrawn from them. Having a Third Party Debt
order issued to freeze a bank account is not something your debtor’s bank manager will have had to deal with often and as you can imagine it sends alarm bells ringing for the bank. The
THEbusiness QUARTER 9
debtor cannot then withdraw any monies from their account until you have been paid. In addition to this, having a
bank account frozen without notice can be extremely problematic for the company concerned and may prevent other vital bills being paid on time, such as rent and employees’ wages. So what information do
you need to keep to give you more power when you need that power? From this article it is apparent that you need to know the bank name, address, sort code and account number of every one of your customers. This can be easily achieved by taking a photocopy of each of your customer’s cheques in the good times. While you can take such
action against a customer of yours if they are not paying you, what can you do if somebody takes recovery action again you or your company? Purnells is the only licenced
insolvency practitioners in Newport and can tailor insolvency solutions for you or your clients needs.
• For free confidential advice contact Suzi Purnell on 01633 214712 or e-mail
suzi@purnells.co.uk. • Purnells is based at St Marks House, 3 Gold Tops, Newport, S.Wales, NP20 4PG. • Web:
www.purnells.co.uk
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