Money Advice, Debt Advice & Debt Help
Can council tax be included in bankruptcy

Can council tax be included in bankruptcy

Can council tax be included in bankruptcy

Council tax arrears are treated in the same way as any other debt if you go bankrupt. They are included and will be written off unless the account is in joint names. Then, the other account holder will still be liable.

Included in this article:


Want help to go bankrupt? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential

Is council tax debt written off if you go bankrupt?

When you go bankrupt, council tax debt is is included and will be written off in the same way as other unsecured debts you owe.

This is the case regardless of whether you have arrears for your current property or whether the debt is older and associated with a different property.

As long as the debt is in your name, you will be protected from any further collections or enforcement action. There is more about what happens if the account is in joint names later in this article.

Any legal action currently being taken against you by the council to collect council tax arrears must stop.

If bailiff has already been instructed and visits your home, you simply tell them you are bankrupt. They will have to leave your premises immediately. They can’t demand further payment from you.

Does a joint account holder still have to pay the debt?

Where your council tax debt is in joint names, the situation becomes more complicated.

The issue is that when you go bankrupt, you are protected from your debts. But this only applies to you personally. No-one else. The other named account holder of any joint debts you have – including council tax – remains liable for the full outstanding amount.

Because of this, the council is still legally allowed to chase them for the debt owed. If they are unable to pay pay it, they will need to agree a repayment plan with the council.

Where a repayment plan is not suitable, the joint account holder will need to consider starting their own debt solution such as an IVA or going bankrupt themselves.

After you go bankrupt, the other joint account holder is still responsible for 100% of any council tax debt owed. The amount they have to paid is not limited to 50% of the balance.

What happens to your current council tax bill?

Because your council tax bill is issued in full at the beginning of the tax year (in April), the current year’s debt is also included in your bankruptcy. This is the case whether you are in arrears or not.

If the bill is in your name only, you will be told to stop making further monthly payments direct to the council (even if you are currently up to date). However, you can’t keep the money.

You will be required to make your council tax payment to the official receiver (OR) instead. This arrangement will continue until the end of the tax year. When your new council tax bill is issued (in March/April following the date you went bankrupt), your payments to the OR will stop and you must pay the new bill as normal.

In limited circumstances of financial hardship, the OR might let you keep some or all of the money you would have otherwise paid towards your council tax. This is reviewed and decided on a case by case basis.

The above guidance does NOT apply if your council tax bill is in joint names. In these circumstances, you must both maintain the ongoing monthly payments as normal. The joint account holder is still liable to pay the bill.

Need further advice about going bankrupt? Give us a call (0800 077 6180) or complete the form below. Its free and confidential

Arrange a call with a Bankruptcy Expert

    Need help with the bankruptcy process?

    Privacy Policy
    Your information will be held in strictest confidence and used to contact you by our internal team only. We will never share your details with any third party without your permission.

    Leave a Reply

    Your email address will not be published.

    Learn how your comment data is processed.