A record year for council tax debts

Figures released by debt advice charity the Money Advice Trust, show that its National Debtline service has seen a sharp long term trend in calls for help with council tax arrears. One fifth of the calls made to the service last year were asking for help with council tax arrears. In the last five years calls for help with council tax have increased 40 per cent.

The charity estimates that this rise is partly down to the increasing use of bailiffs to collect debts owed to local authorities. 2012 was also a record year for calls relating to parking penalty charges, another local authority collected debt (calls for help with parking penalty charges over the last five years have increased 160 per cent).

Joanna Elson, Chief Executive of the Money Advice Trust, said: "Local authorities are behind the curve when it comes to debt collection. Over the last five years many commercial creditors have come to understand that helping people who are struggling to repay debts find a sustainable repayment plan makes good business sense. In what are difficult times for local authorities they could benefit from taking a more considered approach to debt collection.

"Appointing bailiffs to collect debts all too often benefits no one but the bailiff. The evidence is clear:  bailiffs can cause severe financial and psychological distress. We have heard from many thousands of people who have been subjected to poor bailiff practices, some for debts as little as a £50 parking penalty charge, that have resulted in serious financial difficulty.

"We encourage local authorities to sign up to ‘Council tax arrears - Good practice protocol', agreed by Citizens Advice and the Local Government Association. The solution is already there, we hope 2013 sees local authorities take a more considered view of debt collection, everyone will benefit from it.

"If you are worried about debts owed to local authorities, seek some free advice straight away, as the rules and regulations are extremely complicated. Advice is available over the phone at National Debtline, online at My Money Steps, or face-to-face at your local Citizens Advice Bureaux. Self-employed people or small business owners can contact Business Debtline for free advice."  

Examples of good practice by local authorities:

Consider the level of debt (inclusive of liability order fees) before bailiff action is taken

Set down, as part of contractual arrangements, a clear procedure for people to report complaints about recovery action

Repayment arrangements need to be affordable and sustainable while ensuring that the debt is paid off within a reasonable period