By Mark Hodges on 30/06/16 | Category – Bankruptcy
From our experience, the simple answer to that question is a categoric ‘yes’.
However and in light of the criticism levelled at some Local Authorities by the Local Government Ombudsman (“LGO”) in the past, we are keen to stress the importance of making stringent checks prior to instigating insolvency action so that you identify those Debtors who have the means to pay yet choose not to pay.
As many of you will know, Part VI of the Council Tax (Administration & Enforcement) Regulations 1992, Regulation 49(1) states:
Where a liability order has been made and the debtor against whom it was made is an individual, the amount due shall be deemed to be a debt for the purposes of section 267 of the Insolvency Act 1986(grounds of creditor’s petition).
Nevertheless, the consequences of bankruptcy to a Debtor who owns his or her home are grave and the LGO has been very critical of some Local Authorities whom it believes has acted irresponsibly in commencing insolvency proceedings, finding some of the councils concerned guilty of “maladministration causing injustice”.
Although we believe that some of those councils would not have instigated bankruptcy proceedings had more concerted checks been made, we also feel that the LGO has been somewhat harsh in its findings in other cases.
Indeed, the LGO’s insistence that the use of bankruptcy action should only be taken as a ‘last resort’ implies that it should only be considered after the unsuccessful application of a less draconian remedy such as bailiff action or an attachment of earnings, etc.
However, we are keen to stress that this is not a requirement and the comments of Robert Walker LJ in the matter of Griffin v Wakefield MDC in the Court of Appeal on 24th March 2000 are particularly interesting in that regard:
“I cannot accept that the use of a bankruptcy petition is inherently more draconian than committal to prison and is objectionable on that ground. There can be no objection to the use of a procedure which is permitted by statute and regulations”.
Nevertheless, the LGO’s findings have been well publicised and we would encourage all councils to ensure that they implement robust procedures to ensure that rigorous checks are made prior to the commencement of insolvency action.
Indeed, Local Authorities are best advised to produce written evidence of the decision making process taken when determining that bankruptcy is, in the personal circumstances of the debtor, the most appropriate remedy.
We will be happy to discuss the use of insolvency action as an effective recovery tool with any Local Authority and assist in implementing procedures that will alleviate the risk of criticism from external organisations such as the LGO.
We are willing to provide you with a free demonstration of the services we can offer and if this is something of interest to you, please call Mark Hodges on 020 7467 3999.
You can also visit our website at www.welbecklawllp.co.uk