New High Court ruling on Council tax/rates liability in bankruptcy/insolvency

longtermplanner

I wasn't aware of this.

My first thought is to echo wba31 - this could restrict the number of people that can obtain a DRO.

My second thought is that once you do not have to pay council tax, the number of IPAs must surely rise.

My third thought is what happens to Council Tax Support?

Has anyone thought this through ????

debt_doctor

longtermplanner wrote: »

I wasn't aware of this.

My first thought is to echo wba31 - this could restrict the number of people that can obtain a DRO.

My second thought is that once you do not have to pay council tax, the number of IPAs must surely rise.

My third thought is what happens to Council Tax Support?

Has anyone thought this through ????

I would agree with you on points one and two.
On the third point, council tax reduction is based upon liability to pay, so when liability is removed then no need for the benefit.


Some insolvents will of course benefit, those were their income is still too low to attract an IPA or those who can still enter in to a DRO.


DD

debt_doctor

wba31 wrote: »

Thanks for sending me this link... very interesting...

Could cause problems, do we have to include the council tax? for people close to £15k it could send them over...

Yes, I can't see any reason we could exclude council tax than we could exclude a personal loan or a credit card.


DD

CIS

On the third point, council tax reduction is based upon liability to pay, so when liability is removed then no need for the benefit.

It's an interesting issue.

Although the bankruptcy would cover the value of the council tax charge which is due in effect it doesn't remove or alter the fact that a council tax liability exists and therefore it shouldn't actually prevent any forms of reduction being claimed to reduce the council tax charge outstanding (although obviously all it will do is reduce the amount to be included in the bankruptcy).

This point could make a difference as to whether a person edges in to a DRO.

DorisTrousers

Can't see this lasting too long, local authorities are almost certain to appeal, and even if such an appeal fails then expect very quick legislation to stop this.

If the Government is putting huge pressure on councils, which it is, to freeze Council Tax, or at least keep rises to a minimum, then it will have nowhere to go should it allow this to remain in place. Councils are either going to disregard any pleas to cap rises to recoup inevitable losses as a result of this, or use this ruling to demand the tax all at once, effectively removing the right to pay by instalments. That would be political disaster for any party that allowed it to happen.

CIS

or use this ruling to demand the tax all at once, effectively removing the right to pay by instalments.

They can't as legislation specifically ensure you are given instalments.

DorisTrousers

"They can't as legislation specifically ensure you are given instalments."


Thanks for that. Higher bills for all looks favourite then?

longtermplanner

Next thought:

DROs are affected not just because the value of the CT for the year should be included in the debts but because the removal of the need to pay council tax will surely push anyone who is single and doesn't get Council Tax Support into having more than £50 spare income each month.

And for couples it looks like a huge complication.

debt_doctor

It 's the same situation as rates based water has been for several years.
Other allowances in DRO s are far more generous that in bankruptcy - I could put a couple with 2 over 14's in to a DRO with more than £880pm for housekeeping - imagine that being accepted in bankruptcy?

DD

National_Debtline

debt_doctor wrote: »

.....just for council tax going forward, the rules have changed....


https://forums.moneysavingexpert.com/discussion/4875814


DD

Hey thanks for that. I tried to locate further information via our intranet yesterday but couldn't find it. I'll amend my post. I've heard that the case may be subject to an appeal - Have you heard anything about that?

- David.