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    • Butts
    • By Butts 6th Oct 17, 2:09 PM
    • 143Posts
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    Butts
    Council Tax in Bankruptcy
    • #1
    • 6th Oct 17, 2:09 PM
    Council Tax in Bankruptcy 6th Oct 17 at 2:09 PM
    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.
Page 1
    • StopIt
    • By StopIt 6th Oct 17, 2:55 PM
    • 1,083 Posts
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    StopIt
    • #2
    • 6th Oct 17, 2:55 PM
    • #2
    • 6th Oct 17, 2:55 PM
    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.
    • Butts
    • By Butts 6th Oct 17, 3:17 PM
    • 143 Posts
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    Butts
    • #3
    • 6th Oct 17, 3:17 PM
    • #3
    • 6th Oct 17, 3:17 PM
    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.
    Originally posted by StopIt
    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.
    • debt doctor
    • By debt doctor 6th Oct 17, 5:49 PM
    • 4,135 Posts
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    debt doctor
    • #4
    • 6th Oct 17, 5:49 PM
    • #4
    • 6th Oct 17, 5:49 PM
    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
    Debt 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 ***
    • Butts
    • By Butts 6th Oct 17, 8:42 PM
    • 143 Posts
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    Butts
    • #5
    • 6th Oct 17, 8:42 PM
    • #5
    • 6th Oct 17, 8:42 PM
    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
    Originally posted by debt doctor
    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 !!
    • CIS
    • By CIS 6th Oct 17, 8:51 PM
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    CIS
    • #6
    • 6th Oct 17, 8:51 PM
    • #6
    • 6th Oct 17, 8:51 PM
    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 !!
    Originally posted by Butts
    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 as I'm now a self employed Council Tax advisor and consultant with my own Council Tax consultancy business. My views are my own reading of the law and you should always check with the local authority in question.
    • Butts
    • By Butts 7th Oct 17, 12:45 AM
    • 143 Posts
    • 46 Thanks
    Butts
    • #7
    • 7th Oct 17, 12:45 AM
    • #7
    • 7th Oct 17, 12:45 AM
    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.
    Originally posted by CIS
    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.
    • debt doctor
    • By debt doctor 7th Oct 17, 9:48 AM
    • 4,135 Posts
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    debt doctor
    • #8
    • 7th Oct 17, 9:48 AM
    • #8
    • 7th Oct 17, 9:48 AM
    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.
    DD
    Debt 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 ***
    • CIS
    • By CIS 7th Oct 17, 10:49 AM
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    • 5,720 Thanks
    CIS
    • #9
    • 7th Oct 17, 10:49 AM
    • #9
    • 7th Oct 17, 10:49 AM
    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.
    Originally posted by Butts
    You need contact them again to discuss this - I suspect something has been lost in translation.
    I no longer work in Council Tax Recovery as I'm now a self employed Council Tax advisor and consultant with my own Council Tax consultancy business. My views are my own reading of the law and you should always check with the local authority in question.
    • Butts
    • By Butts 7th Oct 17, 1:47 PM
    • 143 Posts
    • 46 Thanks
    Butts
    You need contact them again to discuss this - I suspect something has been lost in translation.
    Originally posted by CIS
    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.
    Last edited by Butts; 07-10-2017 at 1:55 PM.
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