Creditor takes money from your bank account
If your creditor has taken court action against you for a debt, they may have got a county court judgment (CCJ) or other court order against you. A court order means you have to pay the money back, either in instalments or in full by a certain date.
If you don’t keep to the terms of a court order, your creditor has a number of different options to try and get their money back.
If your creditor thinks that you have the money to pay them and are holding it back, or are due to be paid some money which would cover the debt, they can apply for another court order. This is called a third party debt order. A third party debt order allows your creditor to take the money you owe them directly from whoever has the money.
Usually it is your bank or building society that is holding your money for you. However, if you are due to get a lump sum such as a redundancy settlement, an inheritance or insurance policy payout, your creditor could get your employer, solicitor or insurance company to pay the money to them instead of you. They can only take enough money to clear the debt.
This page tells you what to do if your creditor tries to get a third party debt order against you, including how to try and stop the order and what to do if your bank account is frozen and you're left with no money.
The kinds of debts that may end up with your creditor trying to get a third party debt order include money owed on personal loans, credit cards, overdrafts or hire purchase agreements.
The Child Support Agency or Child Maintenance Service can also take money from your bank account for child maintenance arrears. This is called a deduction order. They don’t need to go to court to get a deduction order.
A third party debt order is different from an attachment of earnings order, where your creditor gets a court order to take money from your wages.
For more information on when your creditor can apply for an attachment of earnings order, see Creditor takes money from your wages.
For more information on other types of action your creditor can take to get their money back, see Further help.
To find out if you've got savings or are expecting a pay out, your creditor can get details of your bank accounts and other financial circumstances. To do this they can apply to the court for an order to obtain information. You’ll have to go to court to give this information on oath.
If you're working, your creditor may also want to know when your payday is. This is so they can time a third party order to arrive at the bank on the day when your wages are paid in and you're likely to have more money to pay them.
There’s nothing to stop you withdrawing money from your bank or savings account if you think the creditor is going to apply for a third party debt order. But you may not know about the order until after it has been made.
For more information about how your creditor can get details of your finances, see How a creditor can get information about your finances.
If your creditor wants to get a third party debt order, they will first apply for a temporary order called an interim third party debt order. This order tells your bank or building society to freeze your account. At this point, your account will be frozen but no money will be paid to your creditor until the judge has decided what to do at the final hearing. The final hearing should take place at least 28 days after the interim order is made.
Your creditor doesn’t have to provide specific bank account details to apply for an interim third party debt order but they must have a good reason for thinking you have an account with that bank.
If you've already written cheques or had a standing order or direct debit paid to your creditor, this could be enough evidence for them to apply for the order.
Once an interim order has been made, the court will send a copy to your creditor and your bank or building society. They get a copy seven days before it’s sent to you. This is so you don’t take any money from the account beforehand.
The bank will then freeze your account, up to the amount you owe to the creditor. They may charge you a fee for doing this
An interim third party debt order can cause you lots of problems. Once it's made, you won't be able to get to the money in your account. This may mean you can't pay essential bills, other debts, or even manage day to day living expenses.
If the order will leave you with no money at all and this causes you hardship, you may be able to apply to court for help.
If you get notice of an interim third party debt order, you should get urgent advice from an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If your money has been frozen, this may cause you hardship because you can’t meet day-to-day living expenses. If you're in this situation, you can make an application to court for a hardship payment order.
Make the application on court form N244. You can download the form from the Ministry of Justice website at: www.justice.gov.uk.
When you’ve filled it in, take the form to court yourself with written evidence of your hardship. This evidence can include:
- copies of wage slips
- bank statements
- mortgage account details
- your rent book
- any other documents which show your financial situation.
If other people in your family will be affected because your money is frozen, for example children or an older person living with you, explain on the form how they will be affected. This will help the court to make a fair decision about your situation.
Usually, you have to pay for this application. However, you might not have to pay the fee at all or it could be reduced because your money has been frozen. Ask the court about this when you take the form in.
A judge will deal with your case on the same day you take the application form in. They can make a hardship payment order which orders the bank to release a certain amount of money to you or to someone else, such as your partner. The order will be faxed to the bank and copies will be sent to your creditor.
Your money won’t actually be taken away if the court makes an interim order. There needs to be a final order for this. For an interim order to be made into a final order, there will be a court hearing. You will be told when the hearing is.
An interim third party debt order will be made final unless you can show there are good reasons for it not to be made.
You may have good reasons to argue that that the order should not be made final. For example, you may be able to argue that:
- your money is in a joint account and the other accountholder does not owe the debt
- the debt is for a small amount. You can argue that a third party order is too serious a step and the debt could be paid off quickly by instalments. A judge can refuse to make a third party debt order final if they consider that the sum owed is too small to justify it
- making the order will cause a lot of hardship to you or your family
- your account is overdrawn
- the money in your account belongs to someone else
- your money is in a building society or credit union account and you'd be left with less than £1 if the debt were paid. This doesn't apply to other bank accounts.
There are other legal reasons that you might be able to use to argue against an interim order being made final. It's always a good idea to get help from an experienced adviser if your creditor applies for a third party debt order.
You can get help to argue against a final third party debt order from an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
If the third party debt order is made final and the money is being taken from your bank account, the bank has to pay your creditor either:
- the amount in your bank account at the date of the interim order or
- enough to pay the balance owing on the county court judgment or other court order.
The third party debt order can only affect money actually in your bank account at the date when your bank received a copy of the interim order. It doesn’t freeze money paid in at a later date.
If your account is overdrawn on the day the third party order is sent to your bank, your creditor won't get their money as there won't be enough funds to pay the debt. If money is paid into your account after this date, it can't be used to pay off your debt.
- Creditor takes you to court for debt
- Changing a court order for debt
- Creditor takes money from your wages
- Charging orders
- How a creditor can get information about your finances