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There are several ways to enforce a money judgment, and it is important to select the method which is best suited to the facts of the case. If the judgment debtor has extensive property assets, obtaining a charging order over one or more of those assets may be the best way to settle the debt. However, charging orders are not always the solution. Sometimes alternative methods, such as third party debt orders, are a better option.
A third party debt order (‘TPDO’) is a method of enforcing a money judgment whereby sums owed to the debtor by a third party are redirected to the creditor. Typically, this will involve funds held in the bank account of the debtor being frozen and then the bank being ordered to pay those funds to the creditor.
Once the creditor applies for a TPDO, the monies held by the third party (often a bank or finance company) are frozen. This triggers an interim TPDO, which will prevent the debtor having access to the sum that the third party is holding. This step is crucial, as it prevents the debtor from clearing out the bank account, and it also prevents the third party holding the monies from paying the money away (either cynically or innocently). Essentially, the interim TDPO immediately protects the creditor’s position.
Following the grant of the interim TPDO, a hearing will be scheduled. At this hearing, the court will decide whether the monies that are frozen should be paid to the creditor. If the court decides that they should be paid over, the third party will be ordered to pay the monies to the creditor without delay.
The court normally issues an interim TPDO within a few days of the creditor applying for the enforcement, and the money held in the third party account is then immediately frozen.
The main benefit of obtaining a TPDO is the certainty of payment. Having located and frozen monies held by a third party, there is no need to rely on assurances from the debtor; the matter is out of the debtor’s hands.