Missing payments? Worried about falling further into arrears? Here’s our guide.
Council Tax debt is a big and growing problem. According to the Joseph Roundtree Foundation, two million families struggle to pay Council Tax. In the past six years, Council Tax debt has soared by 40%. And with bills increasing by as much as 15.4% in some areas this year (and by an average of 3.9%) the problems are only set to get worse.
So if you are struggling to pay your bills including Council Tax, what are your options?
Do I have to pay Council Tax arrears?
Yes. It’s classed as a priority, which means that the consequences of not paying are serious.
You have to pay Council Tax if you are over 18 and rent or own a home. The bill is based on two adults living together, so there are discounts if you are the only adult in your home. You may also be entitled to a discount or exemption if you are in full-time education, on certain types of apprenticeship scheme, are a student nurse, above pension age or are receiving some benefits.
I’m disputing my Council Tax banding. Can I refuse to pay?
Martin Lewis has been encouraging people to challenge their Council Tax assessment on the basis that around 40,000 homes are in the wrong band.
You can find out whether challenging your band is possible – and whether it’s a good idea – on the Money Saving Expert site.
But whether you challenge your band or not, it’s important to maintain payments until a decision is made. If your band is subsequently changed, you’ll get any overpayments refunded.
What happens if I miss a Council Tax payment?
In the first few days, nothing. If you’ve missed a payment because you simply forgot, or you briefly went over your overdraft limit but can now make the payment, you shouldn’t face any fines or penalties providing you pay quickly.
14 days after your missed payment your council will send you a letter asking for the money. Providing you pay within seven days of that letter, your monthly instalments should continue as normal, without fines or other penalties, although there may be a temporary impact on your credit rating.
If you don’t pay within the seven days, however, things get trickier.
What happens if I don’t pay my Council Tax?
After the seven days have elapsed, you run the risk of losing your option to pay in instalments. Instead, the council can ask for the entire Council Tax bill for the year to be paid in one payment. You will be given a ‘final notice’ of seven more days to make that payment.
If you still can’t pay – and for most of the people we work with, if you can’t pay one instalment you’re unlikely to be able to find the money to pay the entire year’s bill – you may be taken to court.
Council Tax debt in Scotland – what happens next?
If you can’t pay your bill, the local authority will refer the matter to the sheriff court. The court will send you a letter asking to pay the amount due within 14 days. They’ll also add a 10% fee to your bill.
With the letter you should also receive a ‘time to pay’ form. This is your opportunity to reach an agreement with the court. If you can pay anything towards your bill, you should lay out the possibilities on the form.
- If your offer is accepted the local authority will cease its action (providing you make the payments as agreed)
- If they don’t accept your offer (or if you didn’t respond to the court’s letter) the court will use an ‘arrestment’ to take the money directly from your bank or earnings. Money could also be deducted from benefits
- If those options aren’t viable, the court could order that goods to the value of the debt be taken from your home by sheriff officers (bailiffs). At this point, the sheriff officers’ fees will also be added to your debt.
- If the total debt is more than £3,000, you could be made bankrupt under an order for sequestration
Can I be sent to prison for not paying my Council Tax?
In England you can be sent to prison for non-payment of Council Tax. Although often highly publicised, instances of imprisonment are rare – just 305 people have been imprisoned in the past 6 years.
In Scotland, Wales and NI however, you can’t be imprisoned for non-payment of Council Tax.
I can’t pay. Should I just wait for the inevitable?
No. Doing nothing and waiting for the demand letters (or worse) to arrive is the worst possible choice. If you can’t pay, do the following:
- Talk to your local council. It’s possible you may be entitled to a reduction you weren’t aware of.
- Explore any options your council may have to help you. During the height of the coronavirus outbreak in particular, some councils were able to offer payment holidays or payment plans. Some councils may continue to offer this sort of help. Even where no practical help is available, if you believe you’ll be able to put things back on track within a matter of weeks, talking to your council may enable you to avoid court action and retain your ability to pay in instalments.
- Explore your debt management options – see below.
How can I stop bailiffs from taking my stuff?
Despite what you may have heard, in Scotland sheriff officers with the authority of a court order can force their way into your property if you refuse entry, provided their actions are ‘reasonable’. They could, for example, break down a door or smash a window and if you obstruct a sheriff officer you could be committing a criminal offence.
The only exception to this is where no one in the house is 16 or older, understands English or understands the situation (because, for example, of mental disability). In these circumstances, the officers should return at another time.
Clearly, these situations are extremely stressful. Before sheriff officers arrive at your door you will have faced numerous letters and demands, all of them likely to increase your level of worry.
But you can stop the letters – and the interest payments and fees – by seeking debt advice. And the earlier you do it, the easier things will be.
Can I use a Scottish trust deed for Council Tax debt?
Yes. Like a sort of Scottish IVA, a protected trust deed is suitable for all types of unsecured debt, which means you can clear a wide range of outstanding arrears – from credit cards to loans and Council Tax arrears with one low monthly payment.
A trust deed typically lasts four years. Once granted, your creditors can no longer chase you for payment and all interest and penalty payments are frozen, so the debt cannot continue to increase. As long as you continue to meet your single, affordable monthly payment, your remaining debts covered by the trust deed will be written off once the trust deed comes to an end. On average, you could reduce your monthly payments by 60%.
Will my council agree to a trust deed or an IVA?
They don’t have to, but all creditors would prefer to receive something rather than nothing. Even if they refuse, provided half of your creditors (in number) or two thirds of them (in terms of debt value) agree, the trust deed will become protected and even those creditors who didn’t agree to it will be bound by it.
How do I arrange a trust deed or an IVA?
You’ll need to talk to a licensed insolvency practitioner like ScottishTrustDeed.co.uk. An advisor will talk to you about your Council Tax (and other) debt to establish whether a Scottish Trust Deed is the best debt management solution for you.
What other debt options do I have?
To find out which option would be right for you, talk to us now.
Can bailiffs enter my home for someone else’s debt?
Bailiffs are granted their powers by the court. If the court order has your address on it they are entitled to attempt to gain access to the property. Even if they gain entry, however, they should only take personal ‘luxury items’ belonging to the person named on the court order.
There are some clear rules about what bailiffs cannot take (no matter who they belong to): they cannot take items needed for work (e.g. laptops) or essential home items such as most cookers, beds and sofas.
But there are grey areas: if the bailiffs want to seize the possessions of your housemate and your guitar happens to be in their room, you’ll need to prove it’s yours to stop it being taken. If your games console is in your bedroom, it wouldn’t be taken. If in a communal area, it might be unless you can prove ownership.
Can bailiffs enter my home if I’m not there?
Generally, bailiffs in England and Wales cannot enter your home unless you or another adult lets them in. If you are out, they won’t usually be able to enter your home but there are some exceptions. Bailiffs may be able to force entry if they have been into your property before. And if they find a way of gaining access without using force (i.e. via an unlocked door), they will be able to make ‘peaceful entry’ even if no one is home.
In Scotland, sheriff officers cannot enter a property to seize possessions if no one in the house is 16 or over, understands English or understands the situation (e.g. because of mental disability).
What happens if I don’t let bailiffs in?
Depending on where you live in the UK, bailiffs (or sheriff officers in Scotland) have slightly different powers if you refuse entry. In England and Wales even if you refuse entry, they can enter through any unlocked door between 6am and 9pm as long as they use ‘peaceful means’. If you’ve locked all your doors, they may be able to force entry providing they have the appropriate court warrant and the debts relate to unpaid court fines or taxes. If the debt relates to anything else (e.g. credit card arrears, Council Tax debts etc) the bailiff will not be able to force entry.
In Scotland, sheriff officers have greater powers of entry, so they can enter your home using reasonable force to collect a wider range of debts. Again, they must have the appropriate court order to do this.
Even if you succeed in stopping bailiffs entering your home, they will be back. Whilst you can complain if you feel you are being harassed, bailiffs are entitled to make repeat visits. The simplest, quickest way of stopping them is to speak to a debt advisor.
Can a bailiff refuse a payment plan?
Yes, but that doesn’t mean it’s not worth making them an offer. You can negotiate with bailiffs and sheriff officers before or when they visit your home (negotiating from an upstairs window or via the letterbox is acceptable if you don’t want to let them in).
If you can’t afford to pay back all the money you owe but you can afford to pay something each week/month, offer that. Ideally, the earlier you contact them the better. That way you can send them your budget and payment plan in advance of a visit rather than trying to do it on the hoof.
If they refuse the plan talk to a debt management professional immediately.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here