What is the effect if the creditor refused without any valid reason to accept the payment made by the debtor?

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 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.

More about deduction orders for child maintenance arrears.

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.

Freezing your bank account

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 can phone our debt helpline on 0300 330 1313. We can usually help between 9am and 8pm, Monday to Friday. Calls cost the same as calls to landline numbers. 

You can also get help by contacting your nearest Citizens Advice.

If freezing your money causes you hardship

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.

Can you stop the final third party debt order from being made

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 with arguing against a final third party debt order by phoning our debt helpline on 0300 330 1313. We can usually help between 9am and 8pm, Monday to Friday. Calls cost the same as calls to landline numbers. 

You can also get help by contacting your nearest Citizens Advice.

What happens if the third party debt order is made final

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.

Further help

The people you owe money to are called ‘creditors’. If you owe money and you don't pay it back your creditor might take you to court.

You should reply to the claim as early as possible - usually within 2 weeks. If you disagree you owe the debt, you can tell your creditor this when you reply.

You should also check your options for getting out of debt - you might be able to agree a plan with your creditor instead of going to court.

If you’re taken to court, a court order will be made. This will say whether you need to pay the debt. If you need to pay the debt, the court order will also say how much you need to pay and when you need to pay by.

If you have creditors in the EU they might be able to take you to court. It depends on where you are.

If you're in the UK they can only take you to court in the UK, unless they’re taking action over a property. But if you’re living in the EU, they can take you to court in the EU. They can’t take you to court if you’re only in the EU for a short time - for example, a holiday. 

Get legal advice if you have creditors in the EU. Find free or affordable legal help.

Your creditor has to send you the right documents before taking you to court. If they haven’t, you might be able to challenge the claim.

When you borrowed the money you should have been asked to sign an agreement which says what you and your creditor agree to.

For most credit agreements, you’ll be covered by the Consumer Credit Act. If you’re not sure, find out if your credit agreement is covered by the Consumer Credit Act.

If your agreement is covered by the Consumer Credit Act, your creditor must follow all 3 steps of the process before taking you to court for debt.

Your creditor must send you a:

1. default notice
2. letter of claim
3. claim pack

If your agreement isn’t covered by the Consumer Credit Act, your creditor might not send you a default notice - they might send you a ‘final demand’ or another document instead. Check your credit agreement to find out what your creditor has to send you.

Your creditor still has to send you a letter of claim and a claim pack, even if your agreement isn’t covered by the Consumer Credit Act.

If you feel your creditor hasn’t acted properly, you might be able to challenge the claim against you. For example, if your creditor hasn’t warned you of the debt or they’ve started legal action too quickly. You should contact your nearest Citizens Advice.

1. Default notice

The default notice includes details of what payments you missed and how long you have to pay. Your creditor has to give you at least 2 weeks. After 2 weeks they can send you a letter of claim. If you make the missed payments, your creditor won’t take any further action.

The default notice also includes a fact sheet from the Financial Conduct Authority which explains your rights.

At the top of the first page it should say:

• ‘Important you should read this carefully’
• ‘Default notice served under section 87(1) Consumer Credit Act 1974’

2. Letter of claim

Your creditor will have sent you a ‘letter of claim’ because they want to start legal action.
This gives you 30 days to reply.

The letter of claim should have come with:

• a ‘reply form’ - use this form to say if you agree you owe the debt or say you need more time
• a ‘standard financial statement’ - use this to make an offer of payment if you can't afford to pay the debt in full
• details of advice organisations
• an information sheet explaining how you and your creditor should act

3. Claim pack

If you and your creditor didn’t reach an agreement, they can start legal action against you.

If your creditor has started legal action, the court will have sent you a ‘claim pack’.

You’re given 2 weeks to reply to your creditor from the day you receive the claim pack.

You should always check they documents are genuine. The form name should be at the top and the form number in the bottom right corner.

There should be 4 forms in the claim pack, which you can also download from GOV.UK:

• ‘N1: Claim form’ - this tells you how much you owe and what the debt is
• ‘N9: Response pack’ - use this to tell the court you need 4 weeks to prepare your defence if you disagree with the debt
• ‘N9A: Admission (specified amount)’ - use this to tell your creditor you agree to all or part of a debt, and make an offer to pay
• ‘N9B: Defence and counterclaim’ - use this to defend a claim if you disagree with the debt, or make a counterclaim if you think your creditor owes you money

If this is the first document you’ve got about the debt, you might be able to apply to cancel it - this is called ‘setting aside’ the judgment.

Cancelling a claim can be complicated - you contact your nearest Citizens Advice for help.

You need to reply to a claim as soon as possible. What you should do depends on if you:

• agree you owe part or all of the debt
• disagree you owe the debt

It’s important to let your creditor know if you change address so you don’t miss letters from your creditor. If you don’t, your creditor might start legal action without you knowing.

What happens depends on what stage of the claims process you’re in.

It’s important to keep to your new payment plan, otherwise your creditor can take further legal action against you.

Tell your creditor if you can’t afford your payment plan because your situation has changed. Your creditor might agree to reduce the amount you need to pay each month.

If you replied to a letter of claim

Your creditor can accept your repayment offer without going to court. You’ll then get a letter confirming your new payment plan.

If you replied to a claim pack

Your creditor can ask the court to make the judgment without a court hearing. You’ll then get a notice from the court confirming the judgment.

What happens depends on what stage of the claims process you’re in.

If you’ve received a letter of claim

Your creditor can refuse your repayment offer and send you a claim pack.

If you’ve received a claim pack

Your creditor can refuse your repayment offer and ask the court to make a decision on your case. This doesn’t usually involve a court hearing. This might mean you’re asked to pay more than you can afford.

After the County Court Judgment has been made

It’s important to keep up payments after the judgment has been made. If you don’t, your creditor might take more action to get the money back. For example, they might ask the court to send bailiffs to your home or take money from your wages.

After the judgment, your creditor might ask the court to secure the debt against your home - this is called a ‘charging order’. They might do this even if you keep making payments. You can find out what to do if your creditor applies for a charging order.

The judgment will stay on your credit file for 6 years and might make it harder for you to get credit.

If you don’t agree with the judgment, or your situation has changed you can ask the court to:

• review the judgment
• change the payments
• cancel the judgment

Check if the court can review the judgment

You can write to the court to ask them to review the County Court Judgment - this is called a ‘redetermination’. You’ll need to ask for a redetermination within 2 weeks of the judgment.

You won’t need a form to ask for a redetermination, just write a letter to the court.

You can ask for a redetermination if all of these apply:

• you can’t afford the payments
• you’ve admitted the claim and made an offer of payment, but your creditors haven’t accepted your offer
• after your creditor didn’t accept your offer, the court set a payment plan without a hearing

Check if the court can change the payments

You can ask the court to change the payments - this is called a ‘variation’. You can ask for a variation if you missed the deadline for a redetermination or your situation has changed.

You’ll have to pay a fee to ask for a variation, but if you’re on a low income, you can apply to get help on GOV.UK.

Find out how to ask the court to change the judgment.

Check if the court can cancel the judgment

If you get a County Court Judgment you don’t agree with, you might be able to apply to challenge it. You should challenge the judgment as soon as possible.

What you need to do depends on whether you replied to the claim.

If you replied to the claim, you might be able to appeal against the judgment. You’ll need to pay for legal advice - check how to look for an affordable solicitor.

If you didn’t reply to the claim, you might be able to ask the court to cancel the judgment - this is called ‘setting aside’ the judgment. Talk to an adviser to find out if you can ask to set aside the judgment.

You’ll also have to pay a fee to ask the court to set aside the judgment. If you’re on a low income, you can apply to get help paying the court fee on GOV.UK.