Liability order and ESA - Enforcement officer question.

JenP85 · 3 December 2017 at 7:42PM

Hi.
I am asking this on behalf of a friend.
She currently suffers from severe depression, anxiety disorder and acrophobia and has done for five years. She has only just been taken off the suicide watch list because shes moved in with me. She has also recently had to file for bankruptcy and has been accepted.
However, sadly she was not quick enough and has a Liability Order against her for tax arrears. While the O.R says it should "Wiped out" by the bankruptcy application everybody else seems to disagree including Stepchange.

We have contacted the enforcement agents and explained about my friends long term health condition and sent proof. They're now happy she has the condition and asked her/us to fill out a form showing our incomings and outgoings. We had filled one in with Stepchange and it says she can only afford the minimum payment of which is around £4 a week as her only income is ESA.

One of her main outgoings is private therapy. As she is unable to leave the house and the NHS in her area do NOT arrange home therapy meetings so she is having to pay for private ones herself (£35 a week) which start next month via Skype and phonecalls. The reason she hasn't started them already is because she was put on a waiting list for a 9 months and now it turns out that they no longer do home visits as stated above. She also wanted to save the cost of the lessons 5-6 weeks in advance JUST incase there was any point where she couldn't afford them in the future for a couple of weeks.

We contacted the enforcement agent with this information who flatly turned it down and asked us to send us the form with her incomings and outgoings. A week later they called us again and said that she could easily afford £50 a fortnight and in their words "She can contact her doctor about NHS funded therapy rather than private". We explained the situation which not only fell on deaf ears but ears that felt the need to say "Well, now we have your in-goings and out goings we can take what we want via third party payments" and put the phone down. Last Thursday my friends ESA was paid in and it turned out that £57.64 had been deducted from it. This has not only left her without money for therapy but also short in other areas as well. This has actually caused her a lot of stress and anxiety over the weekend to the point where she has started to involuntarily pull her hair out which she hasn't done since last year.

Sorry for the long, drawn out post but i wanted to give you as much info as possible.

1: Can they legally do this? We were told by a CAB person that they could only do a third party reduction if she agreed to the amount.
2: Due to her long term condition can they say simply say "Do without therapy" and take what they want?
3: Has anybody got any other advice? I am contacting Stepchange on Monday on her behalf but i just wanted to know if anybody has been in this position before?

thanks for any info you can give.

sourcrates · 4 December 2017 at 1:00AM

Hi,

Something is not right here, you need to speak to the official receiver ASAP because they are correct, the main advantages of bankruptcy is that when you are discharged from bankruptcy, your debts are written off.

This includes income tax and most other debts, but not maintenance obligations, parking fines, student loans, and certain fines.

Once declared bankrupt, liability orders, county court judgements etc, are all automatically reversed.

Speak to the OR.

JenP85 · 4 December 2017 at 12:43PM

This is what we thought when she first declared BR and were told so. Stepchange and a Debt advice line adviser said the same as you.
However, since shes been declared BR and we're still getting chased by them everybody seems to be saying the opposite. Because they've been to court its now a criminal court matter and the debt stands. I went to see a CAB adviser this morning who said "The debt doesn't stand, no matter if it's a Liability order"

However, this is an e-mail we got from Stepchange a few days ago.

"Council tax is a provable debt in bankruptcy, which means this debt is written off when you are discharged from the bankruptcy. However as the council has obtained a liability order before the bankruptcy application, they will still have some powers to collect this debt using enforcement agents.

You will normally be discharged from bankruptcy after 12 months. Until this happens, the council is still allowed to enlist enforcement agents to try and collect goods from your friend's home to repay the debt. The enforcement agents will not have the right to force entry into the property, so as long as no one lets them in, and your friend keeps all their external doors locked, there will be little the agents can do to enforce the debt.

The council will not be able to enforce the debt in any other way, so it will be up to your friend if she wants to try and make a payment arrangement before she is discharged from the bankruptcy.

The official receiver (OR) who will deal with her bankruptcy will look into her income and expenditure, and they will not budget to allow for repayments to this debt. This means the money for a repayment would have be in lieu of another area so may have a detrimental on her personal life (e.g. she uses her food budget to cover a payment to the council)."

We're both extremely confused as we're being told different things from different people. I have spoken to the O.R this morning who said they'll get back to us about this matter in the week.

CIS · 4 December 2017 at 1:07PM

2: Due to her long term condition can they say simply say "Do without therapy" and take what they want?

In principal there is nothing to stop the enforcement agent demanding any specific amount to agree a payment arrangement. They do not have to accept anything other full payment. In practice it would need to be an issue that was raised by way of a complaint to them and the council.

3: Has anybody got any other advice? I am contacting Stepchange on Monday on her behalf but i just wanted to know if anybody has been in this position before?

Apart from trying to negotiate or asking the council to withdraw the enforcement agent or intervene to tell them to accept an arrangement there's not much else that could be done other than trying to sit out the enforcement agent.

However, sadly she was not quick enough and has a Liability Order against her for tax arrears. While the O.R says it should "Wiped out" by the bankruptcy application everybody else seems to disagree including Stepchange.

I would agree with StepChange whilst the bankruptcy is ongoing. Council Tax liability orders are not removed due to bankruptcy - they are a debt that can be included in bankruptcy but the actual orders remain, the balance would just be unrecoverable if they were covered.

There is however a specific issue regarding liability orders where an enforcement agent is already dealing with the liability order - they are not automatically prevented from taking further action during the bankruptcy in specific cases and may continue action.

fatbelly · 4 December 2017 at 1:10PM

JenP85 wrote: »

However, this is an e-mail we got from Stepchange a few days ago.

"Council tax is a provable debt in bankruptcy, which means this debt is written off when you are discharged from the bankruptcy. However as the council has obtained a liability order before the bankruptcy application, they will still have some powers to collect this debt using enforcement agents.

You will normally be discharged from bankruptcy after 12 months. Until this happens, the council is still allowed to enlist enforcement agents to try and collect goods from your friend's home to repay the debt. The enforcement agents will not have the right to force entry into the property, so as long as no one lets them in, and your friend keeps all their external doors locked, there will be little the agents can do to enforce the debt.

The council will not be able to enforce the debt in any other way, so it will be up to your friend if she wants to try and make a payment arrangement before she is discharged from the bankruptcy.

The official receiver (OR) who will deal with her bankruptcy will look into her income and expenditure, and they will not budget to allow for repayments to this debt. This means the money for a repayment would have be in lieu of another area so may have a detrimental on her personal life (e.g. she uses her food budget to cover a payment to the council)."

We're both extremely confused as we're being told different things from different people. I have spoken to the O.R this morning who said they'll get back to us about this matter in the week.

Garbled information from stepchange. If it's a bankruptcy debt as defined by the insolvency act (basically that the liability existed before the date of bankruptcy) then the creditor has no right of action during the bankruptcy period, as the Official Receiver has stated (ask them to put it in writing, show that to the COUNCIL)

Once the client is discharged from bankruptcy there are some debts that can be pursued again. A fraudulent debt is the most likely example so if the debtor has either:

admitted fraud in an interview under caution
been found guilty at court (not just a magistrates court liability order but a criminal case of fraud)
accepted an administrative penalty

then the situation you describe can take place

JenP85 · 4 December 2017 at 6:47PM

I'd like to thank you both Fatbelly and CIS for your replies! Both have helped and we've taken what both of you have said onboard.. However, lol as you can both see you both have different opinions on this matter which is what we've been getting from the start

.
Even today I called Stepchange and was told pretty much what Fatbelly said only to ring back 45mins later with a question to get another adviser who says what CIS has said.

I've looked around on the forum and found i'm not the only one who is in the same boat. Hopfully the O.R will call us back soon and let us know what they think.
IF it's the fact that the debt IS counted in the BR then I'll get them to put it in writing AND also request she gets her money back.
It's rather a pain as I suffered a stroke a few years back and my speech can sound quite quiet and slurred when I become nervous. When I call up they either struggle to understand me (The Enforcment agents) which I feel is more them trying to shut us up as nobody else who we have spoken to over the phone about this debt has had any trouble lol or just talk over me. Sadly my friend is in much worse of a state and is unable to call at all.

Once again, thank you both for your help

CIS · 4 December 2017 at 7:14PM

JenP85 wrote: »

I'd like to thank you both Fatbelly and CIS for your replies! Both have helped and we've taken what both of you have said onboard.. However, lol as you can both see you both have different opinions on this matter which is what we've been getting from the start .
Even today I called Stepchange and was told pretty much what Fatbelly said only to ring back 45mins later with a question to get another adviser who says what CIS has said.

I've looked around on the forum and found i'm not the only one who is in the same boat. Hopfully the O.R will call us back soon and let us know what they think.
IF it's the fact that the debt IS counted in the BR then I'll get them to put it in writing AND also request she gets her money back.
It's rather a pain as I suffered a stroke a few years back and my speech can sound quite quiet and slurred when I become nervous. When I call up they either struggle to understand me (The Enforcment agents) which I feel is more them trying to shut us up as nobody else who we have spoken to over the phone about this debt has had any trouble lol or just talk over me. Sadly my friend is in much worse of a state and is unable to call at all.

Once again, thank you both for your help

The links I posted earlier are to the Insolvency Service Manual so they should tally with the OR - if they don't then please post again as it's always useful to find out what they are saying.

It's a strange area where the enforcement agents are involved. The debt is included in the bankruptcy but that doesn't stop them from enforcing againt it (in certain cases).

Liability order and ESA - Enforcement officer question.

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free