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Is council tax debt written off by bankruptcy

Published: 17 May 2024

Council tax bill showcasing the affect of bankruptcy on council tax debt

This guide provides all the information you need about council tax debt and going bankrupt.

Find out how much of the money you owe the council will be written off and what happens if your bill is in joint names.

Contents

Can you write off council tax debt by going bankrupt?

You can write off council tax debt if you go bankrupt. This is because it is treated it in the same way as any other unsecured debt or utility bill.

The council must accept that after the date of your bankruptcy, they can no longer make you pay the debt you owe them.

You can include all the arrears you owe at your current address. This means if you have outstanding bills from previous years, you will also write these off.   

Going bankrupt writes off all the debt you owe your local council and gives you a fresh start.

Can you write off council tax debt by going bankrupt?

What if you owe council tax from previous properties?

The good news is it’s not just the council tax debt you owe at your current address that you will write off.

If you have old bills from previous addresses with either the same or different councils, you can also include these in your bankruptcy as well.

Does bankruptcy stop council bailiffs?

Yes. Once you go bankrupt, any bailiff taking action against you to enforce council tax debt has to stop. This is because bankruptcy gives you legal protection. It protects you from all legal enforcement actions.

If the council have already been granted a liability order against you and appointed a bailiff, they must call them off.

A council appointed bailiff is no longer allowed come to your property. They can’t take away any of your goods or clamp your car.

If a bailiff does show up at your home after you go bankrupt, stand your ground. Explain to them that you have been made bankrupt and show them a copy of your bankruptcy order. They can check that you are bankrupt on the Individual Insolvency Register (IIR). They should then leave straight away.

If a council bailiff visits you after you are bankrupt, contact the council and make sure they know. It is possible that the message has not yet got through to them from the Official Receiver’s office.

What happens if your council tax debt is in joint names?

Bankruptcy is an individual debt solution. This means that once you are bankrupt, only you are protected.

If you have any debts in joint names with someone else, it can be a problem. The reason for this is that the other named account holder remains liable for the debt.

This is important because many council tax bills are in joint names. In these circumstances, the council can still force the other account holder to pay 100% of the balance owed (not just their half).

If your council tax debts are in joint names with anyone else, the debt will still have to be paid in full even after you have gone bankrupt. The other account holder still has to maintain the payments and pay off any arrears.  

The only way to write off a joint debt you owe the council is if you both go bankrupt. Alternatively, the other account holder could start an IVA to manage their debts.

What happens if your council tax debt is in joint names?

Do you have to pay this year’s council tax bill?

If your council tax bill for the current year is just in your name, it is also included in your bankruptcy.

Even if you are paying the bill on a monthly basis, after you go bankrupt you stop these payments.

The reason for this is that council tax bills are issued in full every April. As such, the whole bill already exists on the date you go bankrupt. 100% of the outstanding balance for the year can therefore be included.

You will have to start paying council tax again from the start of the next council tax year (ie next April).

The only time this is not the case is if your council tax bill is in joint names. If so, you must continue to paying it as normal (unless you are both going bankrupt).

   Written by James Falla

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