Thousands bankrupted over unpaid council tax

Thousands of vulnerable people are being forced into bankruptcy as town halls use increasingly aggressive tactics to chase council tax arrears.

Some households owing hundreds of pounds are saddled with debts in five figures as a result of such action, The Times has learnt.

Pensioners and poor families have even had to sell their homes to meet huge legal costs arising from bank-rupcy orders that dwarf the original debt, according to Citizens Advice.

Bailiffs were used in 1.2 million cases to recover council tax arrears last year, and 2.5 million households received courts summonses. Of 19,156 bankruptcy petitions, one in five was lodged by local authorities. In 1992-93 the proportion was one in a hundred.

The figures have prompted calls for councils to be less draconian and to use bankruptcy proceedings only as a last resort in extreme cases.

Opposition parties say that town halls should not be putting people’s homes at risk when the Government is putting pressure on mortgage lenders to avoid repossessions.

Figures obtained by the Liberal Democrats under freedom of information legislation and extrapolated across England and Wales show that 3,500 householders were pursued for bankruptcy or made bankrupt by town halls last year.

Separate research by Citizens Advice suggests that town halls filed more than 5,000 petitions for bankruptcy, of which at least 1,000 resulted in orders allowing the seizure of assets. Julia Goldsworthy, the Lib Dems’ local government spokesman, said: “Public bodies should do everything they can to ensure that bankruptcy is avoided where possible.”

The Government said that local authorities needed to chase arrears to stop bills from soaring. A spokesman for the Department for Communities and Local Government said: “Local authorities must have the tools at their disposal to tackle the small minority of people who can but won’t pay.”

Sir Jeremy Beecham, the vice-chair-man of the Local Government Association, said: “People struggling to pay bills are given as much leeway as possible.”

January 7, 2009
Jill Sherman and Frances Gibb

Source: The Times

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