Council tax arrears can be included in your IVA. This includes debt owed for previous and current properties. However, if the debt is in joint names, the other party will still be liable.
Included in this article:
- Can council tax debt be included in an IVA?
- What happens to your bill for this year?
- Is a joint bill written off?
Want to start an IVA? Give us a call (0800 077 6180) or complete the form below.
Can council tax debt be included in an IVA?
You can include any council tax debt you owe in your IVA. It is treated in the same way as any other unsecured debts such as a credit card or bank loan.
Perhaps you have an outstanding bill from a property where you used to live. Alternatively you might have arrears at your current property. Ultimately this does not matter. you can include bills from just one or multiple different councils.
Once your IVA starts, the council has to halt their collections actions. They can no longer threaten you with court action. Any bailiff that has already been instructed must cease their activities.
You can also stop any payment plan you have already set up with the council to repay your debt. The money they are owed is dealt with by your IVA from now on.
Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.
What happens to your council tax bill for this year?
Where your council tax bill is in your name only, any remaining balance on your current years bill is also included in your IVA.
Once the Arrangement is in place, you will be told to suspend your normal payments to the council. The money you were paying them is instead paid into your Arrangement over and above the standard agreed payment.
This situation remains in place until you receive your new council tax bill. At that point you stop over paying your IVA and start paying your new monthly council tax payments.
When you set up your IVA, you should include your council tax payment in your living expenses budget. Your IVA company will identify this and explain that the payment should be suspended until you get your next years bill.
Your current year’s council tax bill can only be included in your IVA if it is in your name only. If the bill is in joint names with someone else, it will be left out must continue to be paid. Your IVA does not protect the other joint account holder.
Is a joint bill written off?
You need to be clear that your IVA only protects you personally from your creditors.
This means if your council tax debt is in joint names with anyone else, the other joint account holder is still liable to pay all of the outstanding balance.
The amount outstanding is not divided into two with your half included in your IVA. The other account holder can still be chased for 100% of the debt.
One way to overcome this problem is to keep any joint council tax debt out of your IVA. Instead, you will have to set up a separate repayment agreement direct with the council. Bear in mind, once you have caught up with the arrears, any amount you have been overpaying to the council will probably then have to be added to your ongoing IVA payment.
An alternative solution is for you and the other joint account holder to both start an IVA. However this would normally only be suitable if they also have other debts they are struggling to pay.
Need more advice about starting an IVA? We can help. Call 0800 077 6180 or complete the form below. Its free and confidential.
