Council Tax and Benefits Service

Debt Recovery Processes – Council Tax

and Housing Benefit Overpayments
 Version Control

Version Revised by Date Description

1 Andi Frangeskou May 2015 Original issue

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Council Tax and Benefits: Debt Recovery Processes

1. Introduction
This document sets out Newham’s Council Tax and Benefits Service approach in relation to
the recovery of unpaid council tax and unpaid housing benefit (HB) overpayments.
The document also sets out how we will identify and deal with vulnerable residents, and
those experiencing serious financial difficulties. Our aim is to minimise undue stress and
hardship on vulnerable people, and to make arrangements which are both affordable and
sustainable.
The powers for the recovery of unpaid council tax are contained within The Council Tax
(Administration & Enforcement) Regulations 1992.
The powers for the recovery of unpaid HB overpayments are contained within The Housing
Benefit Regulations 2006, and The Housing Benefit (Persons who have attained the qualifying
age for state pension credit) 2006.

2. Overall approach
The Council Tax and Benefits Service (CT&B) has a statutory duty to collect monies owing to it
and seeks to employ the most cost effective methods of recovery while fully meeting its
statutory requirements within the legislative framework.
CT&B is also committed to assisting debtors to pay their council tax bills and HB
overpayments. This includes:
a) Providing debtors with timely and accurate bills, decision notices and invoices (as
appropriate)
b) Providing debtors with assistance to make affordable payment arrangements based on
their financial and household circumstances
c) Offering a range of payment options, dates and frequencies when payments can be
made
d) Signposting debtors to a range of available debt advice and benefits advice
e) Referring debtors with serious or multiple debts to our own Debt Advice Team for support,
where appropriate
Where following these measures council tax bills or HB overpayments remain unpaid, CT&B
will use all available powers open to it in order to pursue these debts:
• Council Tax debts – we can summons to Court, and after a liability order has been
obtained we can collect through an attachment to earnings/benefits, through
enforcement agents, obtain a charging order against property, declare a person
bankrupt; in extreme cases imprisonment is also an option
• HB Overpayments – we can recover overpayments from ongoing and future
entitlement, collect through an attachment to earnings/benefits , collect through
enforcement agents, obtain a charging order against property, declare a person
bankrupt, obtain a third party debt order or a County Court Judgment
Paragraph 3 of this document sets out the usual stages of collection and recovery of Council
Tax due. Paragraph 4 sets out the usual recovery processes for Housing Benefit
overpayments.
Where we establish that a debtor is vulnerable, or has a vulnerable person in their household,
and is deemed unable to manage their financial affairs or not capable of understanding the
Council Tax and Benefits: Debt Recovery Processes
recovery process or the consequences if a debt remains unpaid, we will aim to work with the
debtor in the most appropriate way, based on the individual merits of their circumstances.

Paragraph 5 of this document sets our approach to dealing with vulnerable debtors.

3. Stages of Recovery – Council Tax

At any point, a debtor who is experiencing difficulties with making payments, may be offered
an office appointment, or telephone interview if they are unable to attend the office, to
discuss the difficulty they are having. The interviewing officer will work with the debtor to
come to a mutually agreed payment arrangement.
Stage 1: Bill
Existing residents are issued with annual bills each year in March. New residents or those who
change address will receive a bill shortly after they take up residence.
The bill advises, among other things, the availability of and how to claim Council Tax
Reduction, and contact details for the National Debt Advice Line.
The bill itself includes details of how a debtor can request payment instalments over 12
months or 50 weeks, rather than the default of 10 months, as a way to spread the cost over a
longer period..
We offer the following payment method options:
• Direct debit
• Online (through the council’s website or the person’s online banking system)
• Standing Order
• Credit or debit card
• Via the person’s bank
• Via Post Office or PayPoint outlet (using the barcode on the bill)
• By cheque to be sent to us by post
Stage 2: Reminder
Where a debtor fails to pay the instalment as it becomes due, they will be sent a reminder
notice. This advises them of the amount owing, how to make payment to bring the account
up to date, and makes it clear that court action will follow if payment is not made. CT&B will,
where it has contact details, telephone or email the debtor to remind them of the due
payment in an attempt to prevent the case progressing further.
The reminder provides the CT&B telephone number and an address for written
correspondence so that the debtor can contact us to resolve any issues they may have.
If the account is brought up-to-date, the instalment plan remains in place unless two
reminders have been issued during that year, in which case the right to instalments is lost.
Where appropriate, the payment plan may be amended to make future payments more
affordable and sustainable.
Stage 3: Final Notice

Where a person has failed to pay following a second reminder or has no right to pay by
instalments, then a Final Notice will be sent. This requires payment in full within seven days, as
failure to pay will lead to the issue of a summons for a liability order.
Where the circumstances are appropriate, a further payment arrangement may still be
entered into at this stage.
Council Tax and Benefits: Debt Recovery Processes
Stage 4: Summons
Where a debtor has failed to bring their account up to date, a summons for a liability order
will be issued along with an arrangement form, giving the debtor a further opportunity to
make an arrangement.
Where contact is made with CT&B , the debtor has the opportunity to explain any personal
circumstances or financial difficulties they may have and to negotiate an arrangement
based on these circumstances.
The liability order application will generally still go ahead, but no action will be taken to
enforce the debt if payments are maintained.
Unless agreed otherwise, where the right to instalments has been lost and an amount
remains outstanding, a summons will be issued advising that a liability order will be sought
from the magistrates’ court. Additional costs for this summons are added to the amount due.
Stage 5: Liability order hearing
Council staff attend the magistrates’ court to assist debtors attending the liability order
hearing, with a view to making an appointment to attend the local office to discuss a
payment arrangement with an officer.
Where the court grants a liability order, there is still a further opportunity at this stage for the
debtor to make a payment arrangement or raise any other issues.
Stage 6: Liability order
A liability order gives the Council certain powers in order to collect the outstanding debt.
These are:
• Power to seek information about someone’s income;
• Power to deduct money direct from earnings
• Power to deduct money direct from benefits;
• Power to refer the debt for collection to our appointed enforcement agents
• Power to declare someone bankrupt;
• Power to apply to the county court for a charging order against property
We cannot apply to the magistrates’ court to commit a person to prison at this stage.
Methods of enforcement
Once we have been granted a liability order, we will normally seek to recover the debt
through an attachment of earnings or benefits, before we consider referring a debt to
enforcement agents. Prior to sending any cases to our Enforcement agents we will write to
the debtor to encourage them to contact us to discuss their debt.
Attachment of earnings
Where a debtor is in employment and those details are available, consideration will be given
to deducting instalments direct from wages or salary.
The amount to be deducted is worked out by the debtor’s employer as a percentage of net
earnings, and may vary from week to week or month to month - for instance if overtime is
worked. The percentages are set out in law and neither the Council nor the employer can
change these levels.
In accordance with relevant regulations, councils are not allowed to have more than two
such orders in place at any one time.
Attachment of certain social security benefits
Where a debtor is in receipt of certain social security benefits we can ask the Department for
Work and Pensions (DWP) Debt Management Team to deduct payments direct from their
benefit.
Council Tax and Benefits: Debt Recovery Processes
Regulations specify the maximum amount that can be made by way of direct deductions.
Deductions made from a debtor’s social security benefit are normally sent to us on a monthly
basis by the DWP Debt Management Team. The DWP will inform us and the debtor of the
weekly deduction being made.
If making deductions would leave a debtor without enough money to live on, the DWP will
be unable to make deductions and will write to us. We will then contact or write to the
debtor with a view to making an alternative payment arrangement. If no contact is made,
the account may be referred to enforcement agents.
Enforcement Agents
We only send cases to enforcement agents where:
• No arrangement has been made: and/or
• Alternative ways of collecting the amounts owed, such as deduction from benefit or
attachment of earnings is not appropriate
Enforcement agents are bound by the Taking of Goods Act (2013) when acting on a case
referred to them, and includes the level of fees they can levy on the debtor.
Enforcement agents will generally be prepared to enter into a payment arrangement with
the debtor during the first or second stage of the enforcement process. Where they are
unable to collect the debt in full, the account is returned to us.

Where an account is returned to us, we will review it and take appropriate action. This may
lead to an application for:
• Insolvency
• Charging order
• Committal to prison
In each of the three options stated above, debtors are encouraged to contact us on receipt
of summonses or other documents sent to them to discuss payment – but clearly by this late
stage any arrangement has to take into account the legal process then underway.
Insolvency action
An application may be made in the High Court for a debtor to be made bankrupt, where
we believe they have sufficient assets for the Council to expect payment in full either before
the hearing or once assets have been realised.
This means that any assets owned by the debtor subject to the order - such as property,
shares or savings - may be used to clear the debt. The court costs will be charged to the
debtor concerned.
Charging order
We may make an application to the County Court for a charging order where the debtor
owns property. The court costs will be charged to the debtor concerned.
Once an entry is made at the Land Registry confirming that the debt has been secured, the
property cannot be sold without the council tax debt being paid first. In certain
circumstances, statutory interest can also be claimed.
Payments can still be made to reduce the debt. If the debt is paid in full, including costs, the
charge will be removed.
Enforced Sale
Where a charging order has been made, we may go on to apply to the County Court for an
order for possession and sale, which gives us the power to sell the property at auction.
We only seek such an order where the property is not anyone’s sole or main residence.
Committal
Council Tax and Benefits: Debt Recovery Processes
Where a liability order has been returned by the enforcement agent and endorsed ‘no
effects’, an application can be made to commit that debtor to prison.
A summons is issued for the debtor to attend the magistrates’ court to explain why the
amount remains outstanding.
The options available to the court are:
• To make an order of imprisonment of a maximum of 90 days, usually suspended on
payment of a set amount at intervals set by the court
• To allow the case to be withdrawn for other actions, for example insolvency, charging
order or attachment of earnings
• To write off some or all of the debt due to an ongoing inability to pay
The court costs will be charged to the debtor concerned.

4. Stages of Recovery – Housing Benefit (HB) Overpayments

At any point, a debtor who is experiencing difficulties making payments, may be offered an
office appointment, or telephone interview if they are unable to attend the office, to discuss
the difficulty they are having. The interviewing officer will work with the debtor to come to a
mutually agreed payment arrangement.
The usual stages of recovery are outlined below.
Notifying the overpayment
Where a debtor has been overpaid HB, a decision notice is sent to them. The decision notice
will include, amongst other matters:
• The amount of the overpayment
• The period the overpayment covers
• The debtor’s right of appeal
The debtor is also advised that they may be able to reduce the debt if they supply evidence
of their income and savings for the period of the overpayment.
If the debtor does not contact us within one month of the date on the decision notice,
recovery action will commence.
Recovery of the overpayment
We have the power to recover an overpayment of HB by various methods. Only one
method at a time can be employed to recover an overpayment.
Unlike the recovery process in respect of unpaid council tax, we are not required to go to
court before we can employ most of the methods available to us in respect of HB
overpayments. The exceptions are charging orders and recovery through civil proceedings.
We have the power to change the method of recovery where either the current method is
no longer appropriate or possible. For example, we cannot continue to employ recovery by
claw back if the debtor ceases to be entitled to HB at a later date, or we cannot continue to
take deductions from a debtor’s earnings if they cease to be employed.
Methods of recovery of HB overpayments
We normally seek to recover HB overpayments by claw back from ongoing HB entitlement or
by invoice before we consider other recovery or enforcement options available to us, based
on the circumstances of each case.
a) By claw back
We can make weekly deductions from ongoing payments of HB entitlement, whether
these payments are being sent to the debtor, landlord, appointee or agent. Maximum
amounts of weekly deductions are set by relevant regulations, and uprated annually.
Council Tax and Benefits: Debt Recovery Processes
Claw back may also be made from a partner’s ongoing HB, as long as the debtor and
partner were a couple at the time of the overpayment and continue to be a couple
whilst deductions are being made.
Where we are contacted about the weekly rate of recovery, we can use our discretion to
reduce the amount, where we are satisfied that no to do so will cause undue hardship.
b) By invoice
We can issue an invoice to the affected person, i.e. the person we have decided to
recover the overpayment from, for the amount outstanding. The invoice includes details
of debt advice services.
We offer the following payment method options:
• Online (through the council’s website or the person’s online banking system)
• Standing Order
• Credit or debit card
• Via the person’s bank
• Via Post Office or PayPoint outlet (using the barcode on the bill)
• By cheque to be sent to us by post
The debtor has the choice to repay the whole overpayment in one transaction or
contact us to make an arrangement to pay it back by instalments. Where repayment is
agreed by instalments, we normally seek to set up a standing order with the debtor and
for the debt to be cleared within a year. A longer period may be agreed where we are
satisfied that no to do so will cause undue hardship.
If the debt is unpaid or no arrangement has been made within 14 days after the date of
the invoice, we will:
• Issue a reminder asking for full payment or an arrangement within seven days
• Issue a final notice after seven days of the reminder asking for full payment or an
arrangement within seven days
Where contact details are available, an officer will also telephone, or email or text the
debtor and invite them to pay the overpayment in full or to make an arrangement.
If the debt remains unpaid or there has been no contact from the debtor after a further
seven days we have the power to apply for a County Court Judgment to enforce
recovery of the overpayment by other methods, e.g. bankruptcy, charging order.
c) By direct deductions from certain social security benefits
Where the debtor is in receipt of certain social security benefits, we can ask the DWP
Debt Management Team to deduct payments direct from that debtor’s benefit. Such
deductions may also be made from benefits payable to the partner, as long as the
debtor and partner were a couple at the time of the overpayment and continue to be a
couple whilst deductions are being made.
Regulations specify the maximum amount that can be made by way of direct
deductions. Deductions made from a debtor’s social security benefit are normally sent to
us on a monthly basis by the DWP Debt Management Team.
The DWP will inform us and the debtor of the weekly deduction being made. If making
deductions would leave a debtor without enough money to live on, the DWP will be
unable to make deductions and will write to us. We will then contact the debtor with a
view to making an alternative payment arrangement.
d) By an attachment of earnings
Where the debtor is in employment and those details are available, consideration will be
given to deducting instalments direct from wages or salary.
Council Tax and Benefits: Debt Recovery Processes
The amount to be deducted is worked out by the debtor’s employer as a percentage of
net earnings, and may vary from week to week or month to month - for instance if
overtime is worked. The percentages are set out in law and neither the Council nor the
employer can change these levels.
e) From the landlord/agent
We can recover an overpayment in respect of one tenant (tenant A) from HB paid to a
landlord/agent in respect of another tenant (tenant B), i.e. when the landlord has been
classed as responsible for repayment of a debt (sometimes known as ‘Blameless Tenant’
recovery).
When this method of recovery is applied, the landlord/agent must record that HB was in
fact received in respect of tenant B.
f) Referral to Debt Collection Agency
Where there are no assets and payments are not forthcoming, or the debtor cannot be
located, the overpayment will be referred to debt collectors who will attempt to locate
and contact the debtor. Where possible, immediate repayment or an instalment
arrangement will be negotiated.
g) From the estate of the deceased
Where the debtor is deceased, we may recover the overpayment from their estate.
h) County Court Judgement
Where all other recovery options have failed to recoup the overpayment, we have the
option to apply for a County Court Judgement which can give us further enforcement
powers to recover the overpayment from the debtor:
• Charging Order - where the debtor owns property. The court costs will be charged
to the debtor concerned.
Once an entry is made at the Land Registry confirming that the debt has been
secured, the property cannot be sold without the overpayment being paid first. In
certain circumstances, statutory interest can also be claimed.
Payments can still be made to reduce the debt. If the debt is paid in full, including
costs, the charge will be removed.
• Attachment of Earnings Order - where the debtor is in employment, the order
requires them to provide their employment details to enable deductions to be
made direct from their wages or salary, as explained above.
• County Court Enforcement Agents – where the County Court’s own Enforcement
Agents will collect the debt on our behalf, and includes powers to enter the
debtors property and to seize goods.
• Third Party Debt Order – where the debtor has money in a bank or building
society, a third party debt order allows us to take money up to the value of the
debt directly from the debtors account.
i) Write Off Procedure
At any stage, an overpayment debt may be considered for write off. The reasons may
vary from discretionary write offs to where continuing pursuit of recovery would cause
extreme distress and hardship, to untraceable write offs for those debtors who cannot be
traced.

5. Statement on Potentially Vulnerable Debtors

There is a need for our officers and partners involved in the collection of debt on our behalf
to identify those debtors who could be identified as potentially vulnerable. Such debtors
may require a different approach in order to take into account their individual financial and
personal circumstances.
Council Tax and Benefits: Debt Recovery Processes

Vulnerability indicators and triggers

In the absence of a legal definition of ‘vulnerability’ we have developed a broad set of
indicators which may suggest a person (or a member of their household) is vulnerable, and
that vulnerability means they are unable to manage their financial affairs, or unable to
understand the recovery process, or the consequences if a debt remains unpaid:
• Ongoing mental illness/depression
• Risk of suicide
• Long standing health condition
• Learning disability
• Terminal illness
• The elderly – where it is clear the person is unable to deal with payments
• Recent life event which has put stress on the debtor and/or the household, e.g.
bereavement, separation/divorce
The above list is not intended to be a definitive or prescriptive list, and we are committed to
treating each case on its merits.
We recognise that certain characteristics of a council tax account or benefit claim may
suggest vulnerability, e.g. entitlement to a discount based on the presence of a person who
has a severe mental impairment, or receipt of a disability related benefit or pension.
Adjusting normal procedures
Where we have reason to believe a debtor is potentially vulnerable, we will suspend our
normal recovery procedures whilst we investigate the particular circumstances of the case.
Where a case is with the Enforcement Agent, and they become aware of a potential
vulnerability, they will be required to return the case to CT&B. We will then make further
enquiries and come to a decision about how the case should be progressed.
Where we are satisfied that the debtor is vulnerable, no enforcement action beyond the
obtaining of a Liability Order or County Court Judgement will be taken (or enforcement
action in progress, e.g. charging order, bankruptcy, will be withdrawn). Consideration will
also be given to writing off summons and liability order costs from the debt or withdrawing
the County Court Judgement where (because of their vulnerability) we feel the debtor was
unable to understand the recovery process or the consequences if a debt remains unpaid.
We will seek to make alternative affordable and sustainable payment arrangements with the
debtor or their representative/advocate.
Reviewing accounts and cases
Debtors deemed to be vulnerable will have their accounts or claims flagged as ‘vulnerable’
on our local system so that officers can easily identify established cases.
Where we decide that the ‘vulnerability’ in any case is not long term or permanent, we will
review the debtor’s financial, personal and household circumstances at an appropriate
interval, e.g. bereavement.
Debtors who are not considered vulnerable, but are experiencing serious financial difficulties,
e.g. multiple debts, will have their accounts or claims reviewed. We will review their financial,
personal and household circumstances at an appropriate interval to determine whether
arrangements in place can be modified.

Andi Frangeskou
CT&B Training Manager
6/5/15