What Is Council Tax Debt?
Council Tax debt is a priority debt. You need to pay it before you pay off other debts, such as credit cards or loans. If you ignore it, you’ll be taken to court and bailiffs may visit your home to recover the money.
Council tax arrears can quickly become a problem. Whilst some debts are low priority, with interest mounting if you don’t pay and the creditor may take civil proceedings as a last resort, council tax debt can lead to more serious consequences like bailiff visits and bankruptcy. In the worst cases, council tax arrears can lead to imprisonment or a suspended sentence. Tackling your council tax debt is something you should focus on as a matter of urgency.
Council Tax Debt: what happens if you do not pay.
If you’re not keeping up with your council tax payments, there are several consequences that you might have to deal with. The council may deduct the payments straight from your wages or salary, so you won’t have a choice about when you pay it back or how much will be taken each month. If you’re on benefits, the money may be taken straight from your benefits payment.
As your council tax debt lies with your local council, they have the power to claim your money back in ways that other creditors can’t. If taking money straight from your income doesn’t clear your council tax arrears, they’ll move on to other solutions like sending bailiffs to your house. You may be forced into bankruptcy, could lose your home or might even be given a prison sentence if it’s believed that you’re avoiding your debt.
Prison sentences are rare for council tax arrears usually it is for persistent non-payment and the council may commence committal proceedings, but something that you should be aware of. They’re typically given in situations where it’s believed that you could repay your debt but are actively choosing not to. In a typical year, a little over 6,000 people receive a prison sentence or suspended sentence. Around 90% of these are suspended sentences, but that means you could be imprisoned if you continue to avoid paying your debt.
Things you should be aware of
One of the easiest ways to pay your council tax is by Direct Debit. This means that the money is taken automatically when due. You don’t need to think about it or set any reminders.
You can also pay your council tax bill online, at the Post Office, in person or over the phone.
You’ll get into council tax arrears if you start to miss payments. This can happen because you forget to pay a bill or don’t have enough money in your account to cover the monthly Direct Debit.
If you miss one payment, you’ll usually be sent a letter to remind you to pay. If you pay within 7 days, you can continue as normal. If not, you’ll receive a second reminder. You can only receive a maximum of two reminders in one year, either for the same missed payment or for two different months.
After your second reminder, if you still can’t pay, you will lose the right to pay monthly. Instead, you’ll now owe the full year’s council tax and be expected to pay it at once. If this happens, call your council as soon as possible as they may let you negotiate a repayment plan, to allow you to continue with monthly payments, but if you do not make contact the council will continue with action against you.
Next Steps for Council Tax Debt
The council can make a legal demand for payment. Legal costs can be added to the total council tax debt, with legal action taken if you can’t or won’t pay what you owe. Usually, the council will try to take the money by force. They’ll claim the money from your monthly income, through employment or your benefits. Your income could drop suddenly, which could be a challenge if you’ve already struggled to make ends meet.
If the council can’t recover your debt, they might send in the bailiffs. Your property may be seized to cover the cost of your debt. If bailiffs don’t get the results they need, you’re likely to be taken to court.
Once you’re taken to court, it’s up to the court to decide how you’ll make your repayments. At this stage you may be faced with a prison sentence for non-payment or could receive a more positive result with a more manageable way to make repayments.
Managing Priority Debts Like Council Tax
Council tax is a priority debt because the consequences of not paying are very serious. Most creditors can’t take their money directly from your wages or benefits, so you’re given more control over what you pay and when you make repayments. With council tax arrears, the decisions are taken out of your hands quickly. If you’re struggling with council tax arrears, the situation can escalate quickly to bailiffs or a prison sentence. If you’re struggling with several debts, council tax should be a high priority. Other creditors can wait or might be more willing to take smaller payments over a longer period but missed council tax payments can even lead to the repossession of your home.
Dealing with Council Tax Arrears
Council tax debt can affect absolutely anyone. If you fall behind on your payments, you should contact the council as soon as possible to talk through your options and explain your current situation. The council can be lenient, but only if you can explain why you haven’t been able to make payments.
You may be able to show a copy of your household budget. With this, you can make an arrangement to repay at an affordable rate. If the council can’t accept what you’ve offered, they may decide to take further action.
Very rarely and each case will be dealt with on its own merit, councils will write off council tax arrears the council may consider this for case of those who are in severe financial difficulty. If you’re really struggling with debt, your council tax arrears can be written off as part of a bankruptcy arrangement.
Treat council Tax as a top priority to avoid losing your possessions or your home!!