Council Tax in Bankruptcy
Butts
Posts: 1,289 Forumite
I am completely up to date with this years Council Tax Payments and was at the time of my Bankruptcy. Like most people I am paying by installments and pay the full whack (- 25% discount for sole occupier).
In my Interview (which did not result in an IPA) the Adjudicator mentioned something about if I was earning a bit more there may be a situation where this money would be paid to them rather than the Council for the rest of the Tax/Council Tax Year.
My SOA resulted in a shortfall of about £160 per month.
Can anyone explain what the rules are with regard to this area. I have heard of an NT IPA but never a Council Tax one.
In other words in what circumstances could the Council Tax be paid to the OR rather than the Council when you are not in arrears at the time of bankruptcy and are able to maintain your payments through your agreed I&E accepted by the OR at Interview.
In my Interview (which did not result in an IPA) the Adjudicator mentioned something about if I was earning a bit more there may be a situation where this money would be paid to them rather than the Council for the rest of the Tax/Council Tax Year.
My SOA resulted in a shortfall of about £160 per month.
Can anyone explain what the rules are with regard to this area. I have heard of an NT IPA but never a Council Tax one.
In other words in what circumstances could the Council Tax be paid to the OR rather than the Council when you are not in arrears at the time of bankruptcy and are able to maintain your payments through your agreed I&E accepted by the OR at Interview.
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Comments
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One that seems to be on a council by council basis this.
Some councils basically write off this tax years council tax liability and it goes into your bankruptcy. If this then results in a surplus, that would then go to the OR. If you're in deficit, and the council tax wont change that, it'll not be claimed.
However, some councils do not do this. You'll likely be contacted by the council in due course if they do so, but it may be worth contacting them.
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One that seems to be on a council by council basis this.
Some councils basically write off this tax years council tax liability and it goes into your bankruptcy. If this then results in a surplus, that would then go to the OR. If you're in deficit, and the council tax wont change that, it'll not be claimed.
However, some councils do not do this. You'll likely be contacted by the council in due course if they do so, but it may be worth contacting them.
Sorry I don't quite understand your meaning in the second paragraph.
Why are The Council going to write off the liabilty when I have already paid most of it for the current year ? I am also in a position to continue paying it.
When you say results in a surplus are you referring to my Income and Expenditure Monthly - ie the payments push me into enough of a surplus to warrant an IPA ?
There is nothing about this on the Gov UK Bankruptcy Guidance.0 -
Hi,
A council does not have a choice as to whether their council tax is included in bankruptcy or not. Wherever in the current c/tax year you become bankrupt, the remaining amount (the future instalments) are a bankruptcy debt.
You do not have to pay this years council tax unless you move home etc and so get a new liability.
What the OR means is that as you have no c/ tax to pay till next April - you might have surplus funds for an IPA. Rather sensibly (and something I often do for clients) you have a negative SOA which means that even by disregarding the c/tax expense you still do not have over £20 surplus where an IPA could theoretically start.
DDDebt Doctor, Debt caseworker, Citizens' Advice Bureau .
Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***0 -
debt_doctor wrote: »Hi,
A council does not have a choice as to whether their council tax is included in bankruptcy or not. Wherever in the current c/tax year you become bankrupt, the remaining amount (the future instalments) are a bankruptcy debt.
You do not have to pay this years council tax unless you move home etc and so get a new liability.
What the OR means is that as you have no c/ tax to pay till next April - you might have surplus funds for an IPA. Rather sensibly (and something I often do for clients) you have a negative SOA which means that even by disregarding the c/tax expense you still do not have over £20 surplus where an IPA could theoretically start.
DD
Well I understand the principle of what you are saying.
However the OR told me I would continue paying my Council Tax to the Council and they would not be making any claim on it due to the paucity of my earnings - how does this sit with your comment above - I am confused !!0 -
Well I understand the principle of what you are saying.
However the OR told me I would continue paying my Council Tax to the Council and they would not be making any claim on it due to the paucity of my earnings - how does this sit with your comment above - I am confused !!
For the purposes of bankruptcy the entire outstanding council tax charge to end of the current council tax account (usually 31 March) will be included - if it was a DRO then only the council tax charge to the date of the DRO would be included.
There is a catch if there is a jointly liable person (a partner etc) - unless that person is also going bankrupt then they would become solely responsible for paying the council tax charge.
There are very few situations where the council tax charge wouldn't be included in the bankruptcy.I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.0 -
For the purposes of bankruptcy the entire outstanding council tax charge to end of the current council tax account (usually 31 March) will be included - if it was a DRO then only the council tax charge to the date of the DRO would be included.
There is a catch if there is a jointly liable person (a partner etc) - unless that person is also going bankrupt then they would become solely responsible for paying the council tax charge.
There are very few situations where the council tax charge wouldn't be included in the bankruptcy.
If that was the case in my Bankruptcy surely the OR would have advised me of their intentions and instructed me to cease making payments to The Council.
The adjudicator said nothing of the sort during my Interview.0 -
From the Insolvency Service Technical manual........
31.7.91A Council tax – potential funds available for IPA/IPO
(inserted July 2014)
Council tax is a contingent liability provable in a bankruptcy, irrespective of whether payments were in arrears at the date of the bankruptcy order (see paragraph 40.53).
Where there is a non-bankrupt joint owner/occupier of the family home they will remain liable for council tax and it will continue to be a household expense.
Where either the bankrupt is a sole owner/occupier or both joint owners/occupiers are bankrupt the household expenses will not include council tax for the remainder of that year e.g. to 31 March 2015 so potential additional funds for an IPA/IPO will result. The liability for the council tax does not pass to other adults such as adult children who may be resident at the property. (note 5A)
You are paying for a debt included in your bankruptcy.
DDDebt Doctor, Debt caseworker, Citizens' Advice Bureau .
Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***0 -
If that was the case in my Bankruptcy surely the OR would have advised me of their intentions and instructed me to cease making payments to The Council.
The adjudicator said nothing of the sort during my Interview.
You need contact them again to discuss this - I suspect something has been lost in translation.I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.0 -
You need contact them again to discuss this - I suspect something has been lost in translation.
I note DD's post includes the phrase "potential additional funds for an IPA/IPO will result"
My interpretation of this would seem to be if you qualify for an IPA this is perhaps added to the amount. If you don't and it's inclusion would still leave you way short of being £20 over it is has been treated the same way as an NT Tax Code in my bankruptcy - ie ignored.
This would equate to what the OR told me during my interview that if I earned about another £60 month both this Council Tax and Income Tax would become players as if you add the monthly payments on these and add the Life Insurance I might be foolish enough to cancel the aggregated savings would push me into IPA territory.0 -
i am just bringing this back up to see if it was ever rectified?
My council tax was never discussed at my interview and i havent heard anything from the council either.
What SHOULD happen?
i have already had to forward on copies of the OR letters to different creditors that claim to have not received anything, i am 3 m post bankruptcy and have continued to pay my CT0
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