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A record year for council tax debts

·         Debt charity sees 40 per cent increase in council tax debts
·         National Debtline took over 36,000 calls for help with council tax arrears last year, the most in its 26 year history
·         The charity pinpoints increased bailiff use as the cause of the rise
 
Figures released today 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
·         Promote different payment dates within the month as options available to council tax payers.
 
Year
Total calls to National Debtline for help with council tax arrears
Calls for help with council tax arrears as percentage of all calls to National Debtline
2008
26,250
15.1%
2009
31,578
14.6%
2010
33,214
15.4%
2011
36,425
18.4%
2012
36,724
19.8%
 
 
© Money Advice Trust Charity Number 1099506
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