council tax debt bailiff after br

missminx007

Hi all, hope you can help, I was declared bankrupt on the 1st Nov and included in this was some council tax debt. I have had the bailiff come round to my old address a few times and i went there to collect some mail which showed he has visited since i moved out. I emailed them to tell them the debt they are chasing has been included in my bankruptcy and they replied with this:

RE: Outstanding Council Tax Arrears owed to District Council

Under the terms of the Insolvency Act 1986 347(8) and (9), we can continue our distress action against your goods after the making of a Bankruptcy Order.

Although you cannot pay the balance of £459.41 yourself, we can accept payment from a third party, provided it will not otherwise have formed part of the bankrupt’s estate. In view of this please contact us by 04.12.11 to arrange payment of this debt, to prevent further recovery action from being taken.

what shall i do?! im worried they will come a knocking at my new address.

debtinfo

Smart bailiff, they are absolutely correct in that they can continue the distress, most councils will however call them off so it is worth speaking to the council direct

debt_doctor

Yes indeed they can continue with distress but I would do as suggested and call the council and ask they call off the bailiffs.

If they don't seem to want to do that I would inform them that you intend to deny entry to the bailiffs as is your right to do, and that even if they were to seize goods then once sold the monies would have to be passed to the official receivers office, so the council would get nothing (well probably)

They can't continue any further action once the bailiffs are called off.

DD

debtinfo

debt_doctor wrote: »

even if they were to seize goods then once sold the monies would have to be passed to the official receivers office, so the council would get nothing (well probably)

I believe that the council can actually keep the proceeds of this bailiff action

debt_doctor

debtinfo wrote: »

I believe that the council can actually keep the proceeds of this bailiff action

The legal advice sought by our local council said that it couldn't keep the proceeds, hence we don't see this type of action in our area.

DD

debtinfo

well the IS manual has the following to say and i can see no other part where it says that they cannot keep the proceeds, in fact i have seen cases where they could collect goods already taken by the trustee provided that they have not already been sold



The right of local authorities to distrain for unpaid council tax and non-domestic rates (pre and post bankruptcy order) is exercisable at any time, including after the bankruptcy order and even against property comprised in the bankrupt's estate, in accordance with section 347(8) and (9) of the Insolvency Act 1986. The only exceptions being where an application for an interim order, under section 253 of the Insolvency Act 1986 is pending, whereby the court may forbid the levying of distress under section 254(1)(b) of the Insolvency Act 1986

debt_doctor

And where in that does it say that the council can keep the proceeds?

Ineedaname

DD - surely distrain is about the council recovering property to sell and recoup some money? So that makes sense to me, if they can still take the property, there'd be no point if they weren't allowed to benefit from doing so.

debtinfo

The following paragraph whilst not as explicit as you may like certainly implies that the proceeds may be kept

If goods are removed, or impounded, they must be held for a minimum of 5 days before sale to allow the bankrupt to settle the debt. If a levy of distress is completed by the sale of property but does not recover sufficient funds to discharge the debt under the liability order the local authority, before the bankrupt’s discharge, can levy a second or subsequent distress.

debtinfo

There is also the matter that the law specifically sets down the circumstances where the trustee can charge against the proceeds of the distress specifically and only for the benefit of preferential creditors

Where the local authority has distrained upon the bankrupt’s assets in the period of three months ending with the date of the bankruptcy order, the goods or their proceeds of sale are charged for the benefit of preferential creditors (see paragraph 9.33).

also this paragraph

9.23 Distress and insolvency - General

When an insolvency order is made distress is more significant as a creditor with rights of distress may achieve a priority over other creditors that he/she would not otherwise have. The rights of the distrainor differ depending on the type of insolvency order made.

debt_doctor

9.33 Distress within three months of the WUO or BO (amended October 2008)
If distress was levied by any person within three months prior to the winding-up order or bankruptcy order (i.e. the goods were seized in that period), then the goods or their proceeds of sale are charged for the benefit of preferential creditors to the extent that any assets comprised in the insolvents estate is insufficient to meet the preferential creditors claims.
The distraining creditor who is required to surrender goods or the proceeds of sale has a claim as a preferential creditor for the value of the goods surrendered or the proceeds of sale of the goods. The distraining creditor and the preferential creditors will rank equally in respect of any distribution, except against the amount available to pay preferential creditors by virtue of the funds surrendered. The distraining creditor has a subrogated claim once the surrendered funds have been distributed. It should be noted that in this respect the crown departments will retain their preferential status for a subrogated claim, notwithstanding the abolition of the general right to preferential status contained within the provisions of EA2002.

If they are "required to surrender goods or the proceeds of sale" - does that not mean they cannot keep the proceeds?