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Martin Lewis has lambasted local authorities for their “loan shark-like” behaviour in relentlessly pursuing vulnerable individuals over delinquent council tax payments.
The money saving expert harshly condemned the “grotesque” tactics employed by some councils, where an initial lapse can rapidly snowball into exorbitant penalties and even draw legal complications.
Moreover, Mr Lewis critiqued such methods as more severe than anything seen in the private sector. He said: “Council tax collection practices are so aggressive they’d make the banks blush.
“The grotesque process couldn’t have been designed better to accelerate distress for people in council tax debt, especially those with mental health problems.”
Calling for governmental intervention, the eminent financial advisor pressed for amendments to regulations to provide impoverished families saddled with council tax arrears a grace period to devise viable repayment strategies prior to any further steps by the Council.
Current protocol sends taxpayers a “final notice” upon a single missed council tax payment, insisting on immediate settlement of the annual sum.
This creates a dire situation where a mere £140 oversight can trigger a staggering £1,600 charge in three weeks. Moreover, after just six weeks, councils have the authority to dispatch bailiffs to the homes of defaulting ratepayers due to liability orders.
They possess the power to seize money directly from earnings or benefits, stake a claim against a property owner’s residence, and can even instigate bankruptcy proceedings if the overdue amount surpasses £5,000.
Mr Lewis stated: “When someone misses a monthly payment, rather than asking: ‘How can we help? ‘ many councils say: ‘Now you have to pay 12 times that’. It’s like a caricature of the worst loan sharks.
“Rapidly piling on payment demands, court threats, charges and bailiff action isn’t a fair or productive way to respond to someone missing a payment, either through limited funds, or personal life crisis. It’s like councils are setting a trap for people who miss a payment that they have no hope of escaping from, and that needs to stop.”
In contrast, credit card companies and other recognised lenders are legally required to work with customers who are late on payments, offering alternative payment plans and often waiting a minimum of three months before intensifying their debt recovery efforts.
According to alarming official statistics, council tax arrears have surged by 9% to £6bn across England over the past year, as people struggle with escalating living costs, such as higher rents and rocketing energy tariffs.
In just the past two years, more than 3million individuals have encountered enforcement or bailiff action due to unpaid council tax.
A spokesperson for the Local Government Association said: “Councils strive to ensure they have fair council tax collection policies and should always try to work with people who are struggling to meet their council tax bills.
“We agree bailiffs should only ever be used as a last resort and anyone having trouble paying their council bills should get in touch with their local authority for financial help and advice.”